Indian Rupee devaluation not an allowable trading loss for 1967-68 assessment year. Pound sterling accounts not valid. Tribunal decision not applicable.

The court held that the loss due to the devaluation of the Indian rupee claimed by the appellant was not allowable as a trading loss for the assessment year 1967-68. It was determined that the accounts maintained in pound sterling at the London head office should not be the basis for computing profit and loss. The court also ruled that the decision of the Tribunal for the subsequent year did not impact the assessment for the previous year. The appeal was dismissed, affirming the Commissioner's order, with no costs awarded.

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Issues Involved:
1. Whether the loss due to devaluation of the Indian rupee should be considered a trading loss for the assessment year 1967-68.
2. Whether the accounts maintained in pound sterling at the head office in London should be the basis for computing profit and loss.
3. Whether the decision of the Tribunal for the subsequent year (1968-69) affects the assessment for the previous year (1967-68).

Summary:

Issue 1: Loss Due to Devaluation of the Indian Rupee
The appellant, a non-resident sterling company, claimed a trading loss of pounds 54,897 due to the devaluation of the Indian rupee on June 6, 1966, which was reflected in its London accounts. The ITO disallowed this claim, stating there was no presumption of loss due to devaluation. The AAC upheld this view, asserting that the assessment in India concerned the appellant's income or loss in rupees, and the devaluation did not result in a real loss. The Commissioner, u/s 264 of the I.T. Act, 1961, also rejected the revision application, relying on the auditor's report that the loss on devaluation did not affect profits computed in rupees assessable to Indian taxation.

Issue 2: Basis for Computing Profit and Loss
The appellant argued that the accounts maintained in pound sterling at its London head office should be the basis for computing profit and loss. The Revenue contended that since the business was carried on in India and income accrued in India, the accounts maintained in rupees should be considered. The court referred to the Supreme Court's observation in Sutlej Cotton Mills Ltd. v. CIT [1979] 116 ITR 1 (SC) that the way entries are made in books of account is not determinative of profit or loss. The court concluded that the devaluation of the Indian rupee had no direct impact on the profit or loss of the business carried on in India, as the assessment was also made in India.

Issue 3: Decision of the Tribunal for Subsequent Year
The appellant claimed that the profit due to devaluation of the pound in the subsequent year (1968-69) was taxed, and thus, the loss in the previous year (1967-68) should be allowed. The court observed that the Commissioner had distinguished the facts between the two years and that the assessee had no right of revision for a previous year based on the finding for a subsequent year. The court also noted that one Tribunal is not bound by the decision of another Tribunal and that the decision of the ITO or a Tribunal for a particular year does not operate as res judicata for subsequent years.

The court affirmed the judgment of the learned judge, stating there was no error apparent on the face of the Commissioner's order, and dismissed the appeal without any order for costs.

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