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TMI Blog2013 (12) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... e unamended provisions of Section 43A of the Act - The assessee was entitled to exchange rate fluctuation in respect of foreign currency in the assessment year in question as it was following mercantile system of accountancy - Decided against Revenue. - ITA No. 583 of 2008 - - - Dated:- 26-7-2013 - Ajay Kumar Mittal And Jaspal Singh, JJ. For the Appellant : Ms. Urvashi Dhugga, Senior Panel Counsel For the Respondent : Ms. Radhika Suri, Adv JUDGEMENT Ajay Kumar Mittal, J. This appeal has been preferred by the revenue under section 260A of the Income Tax Act, 1961 (in short, the Act ) against the order dated 29.1.2008 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh (for brevity, the ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer. Not satisfied with the order passed by the CIT (A), the revenue filed an appeal before the ITAT. The ITAT vide order dated 29.1.2008, Annexure A.3 rejected the revenue's appeal on the basis of order passed in assessee's own case for the assessment year 1994-95 in ITA No.707/CHD/2000 dated 31.5.2006. Hence the present appeal. 3. Learned counsel for the revenue submitted that unless the amount was actually paid on account of exchange rate fluctuation by the assessee, benefit of the same should not have been allowed to the assessee as has been done by the ITAT. Relying upon decision of the Apex Court in Commissioner of Income Tax v. Lucas T. V.S. Limited, (2008) 297 ITR 429, Assistant Commissioner of Income Tax v. Elecon Engineering C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his business or profession and,in consequence of a change in the rate of exchange at any time after the acquisition of such asset, there is an increase or reduction in the liability of the assessee as expressed in Indian currency for making payment towards the whole or a part of the cost of the asset or for repayment of the whole or a part of the moneys borrowed by him from any person, directly or indirectly, in any foreign currency specifically for the purpose of acquiring the asset (being in either case the liability existing immediately before the date on which the change in the rate of exchange takes effect), the amount by which the liability aforesaid is so increased or reduced during the previous year shall be added to, or, as the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere required as condition precedent for making necessary adjustment in the carrying amount of the fixed asset that there should be actual payment of the increased/decreased liability as a consequence of the exchange variation. The words used in the unamended section 43A were for making payment and not on payment which is now brought in by amendment to section 43A vide Finance Act, 2002. 8. In order to appropriately adjudicate the controversy, the amendment brought about to Section 43A of the Act by Finance Act 2002 effective from 1.4.2003 may also be noticed, which reads thus:- 43A. Notwithstanding anything contained in any other provision of the Act, where an assessee has acquired any asset in any previous year from a country ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s already been allowed as a deduction prior to 1.4.2003 shall not be allowed again on account of exchange fluctuation at the time of actual payment. 10. The Apex Court in Woodward Governor India (P) limited,'s case (supra) dealt with similar issue for years prior to the assessment year 2003-04 and held that the amendment of Section 43A by the Finance Act 2002 with effect from 1.4.2003 would be applicable prospectively with the following observations:- 34. Lastly, we are of the view that the amendment of section 43A by the Finance Act, 2002 w.e.f Ist April, 2003 is amendatory and not clarificatory. The amendment is in complete substitution of the section as it existed prior thereto. Under the unamended section 43A adjustment to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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