9911796707
TMI Blog1980 (9) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... spent towards the price of the machinery acquired during the relevant accounting period. The ITO while framing the assessment deducted a sum of Rs. 2,63,688 from this amount representing the cost of the machinery on account of devaluation and allowed the rebate on a sum of Rs. 7,25,329 only. The plea raised by the assessee that under s. 43A(2) of the I.T. Act, 1961 (hereinafter referred to as " the Act "), the increase in price on account of devaluation should be taken into consideration for development rebate, was negatived by the ITO and the AAC. It, however, prevailed with the Income-tax Appellate Tribunal, Amritsar Bench (hereinafter referred to as " the Tribunal "), which gave the assessee the necessary relief. At the instance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her Division Bench judgement of the Madras High Court in South India Shipping Corporation Ltd. v. Addl. CIT [1979] 116 ITR 819 for the contrary proposition. In that case, however, the devaluation took place later and the assessee had, on the basis of the mercantile system followed by it, entered in its books of account the cost of the machinery incurred prior to the devaluation. As a matter of fact, the court distinguished South India Shipping Corporation Ltd.'s case [1979] 116 ITR 819 and Arvind Mills Ltd.'s case [1978] 112 ITR 64 (Guj) on this very basis. For the reasons aforementioned, we answer the question of law referred to us for our opinion in the affirmative, i.e., against the revenue and in favour of the assessee. No costs. DHIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,017 and not Rs. 7,25,329 on which development rebate has been allowed by the Income-tax Officer. In this connection, a reference is made to the Commentary of Income Tax by Kanga & Palkhivala, Vol. 1, page 484, where the learned author has observed as under : 'Sub-section (2) provides that " the provisions of sub-section (1) shall not be taken into account in computing the actual cost of an asset for the purpose of development rebate ". The effect of this sub-section is that for the purpose of computing development rebate, the provisions of s. 43A(1) are to be wholly ignored and only the definition of " actual cost " in section 43(1) is to apply. The result is that if an assessee has not borrowed money to pay for a capital asset but has an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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