9911796707
TMI Blog2023 (2) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... preferred against a common order, dated 19th January 2003 passed by the Income Tax Appellate Tribunal, Mumbai ('Tribunal') for the assessment years 1985-86, 1987-88 & 1988-89, 1989-90 & 1990-91 and 1992-93, respectively. 2. Counsel for the parties state that since the appeals involve common questions of law and facts and since they arise from a common order, dated 19th January 2003 passed by the Tribunal, Income Tax Appeal No.597 of 2003 be taken up for purposes of narration of relevant facts. 3. In Income Tax Appeal No.597 of 2003, the following substantial question of law has been framed for our consideration : Whether the increase in loan liability of the assessee due to fluctuation in foreign exchange rates in the subsequent years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t allowance additionally claimed with regard to the additional cost which arose on account of fluctuation in the foreign currency exchange rate of Rs.14,67,18,200/-. 5. The department's claim was that there is no provision under which additional investment allowance could be permitted on account of fluctuation in the foreign exchange rates, for any of the assessment years which were the subject matter of the appeal before the Tribunal. The Tribunal, by placing reliance upon the judgment of this Court in Khatau Makanji Spinning and Weaving Co. Ltd. Vs. Commissioner of Income-Tax [1996] (Bom.) 222 ITR 472 held that the appellant was not entitled to claim additional investment allowance on account of fluctuation in foreign exchange currency r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Shri Ambika Mills Ltd. [1993] 201 ITR (St.) 63, wherein the Supreme Court approved the Gujarat High Court's view on the merits of that case supersedes the decision of the Bombay High Court in Khatau Makanji's case [1996] 222 ITR 472. The said decision in Khatau Makanji's case [1996] 222 ITR 472 (Bom.) being a judgment per incuriam, CIT Vs. Modu Timblo (Individual) [1994] 206 ITR 647 (Bom.), and passed sub silentio and being inconsistent with the earlier decisions of this Court and of the Supreme Court is erroneous and cannot be used by the Revenue to deprive the assessee of the benefit of investment allowance on the increased loan liability consequent upon the depreciation of the Indian currency in the foreign exchange market......" 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xchange........" 9. In view of the fact that the Supreme Court in CIT Vs. Shri Ambika Mills Ltd. (Supra) has already approved the view expressed by the Gujarat High Court on the issue, investment allowance on the increased amount consequent to foreign exchange fluctuation is allowable. 10. For the aforementioned reasons and in the backdrop of the provisions of section 32A read with section 43A, and in view of the judgments referred hereinabove, we answer the questions of law in favour of the appellant and against the revenue. We hold that in terms of section 43A, the increase or reduction in the liability has to take place only in the year of fluctuation and it does not relate back to the year of acquisition of the asset. 11. The appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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