High Court grants appellant's appeal on additional depreciation due to exchange rate fluctuation for 1994-95 assessment year.

The High Court allowed the appellant-company's appeal regarding the claim for additional depreciation allowance adjustment due to exchange rate fluctuation for the assessment year 1994-95. The Court emphasized the need to consider the effect of exchange rate fluctuation on the cost of plant and machinery, citing relevant legal precedents. Relying on previous judgments, the Court ruled in favor of the appellant, setting aside the ITAT and AO's orders and restoring the CIT (A)'s decision to allow the claim. The Court concluded in favor of the appellant, directing the issuance of an urgent certified copy of the order.

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Issues:
- Claim of additional depreciation allowance adjustment due to exchange rate fluctuation for assessment year 1994-95.

Analysis:
1. The appellant-company appealed against an ITAT order disallowing the claim for additional depreciation allowance adjustment due to exchange rate fluctuation for the assessment year 1994-95.
2. The substantial question of law framed was whether the claimed depreciation amount is allowable under Section 43A of the Income Tax Act, 1961.
3. The appellant claimed depreciation on the increased cost of plant and machinery due to exchange rate fluctuation, which was rejected by the AO in the assessment order.
4. The CIT (A) allowed the claim citing relevant judgments, including those of the Calcutta High Court, Bombay High Court, and the Supreme Court of India, and noted a similar claim allowed for a previous assessment year.
5. The ITAT allowed the department's appeal based on the quantification of actual cost at the time of payment, setting aside the CIT (A)'s order.
6. The High Court observed that the ITAT failed to consider the effect of exchange rate fluctuation on the cost, contrary to relevant legal precedents.
7. Referring to the Supreme Court's decision in Arvind Mills Ltd., the High Court emphasized the need to account for fluctuations in liability due to exchange rate changes in determining actual cost.
8. The High Court cited the Gujarat High Court's decision in New India Industries Ltd., supporting the allowance of additional depreciation based on increased liability arising from exchange rate fluctuation.
9. Consistently with previous judgments, the High Court ruled in favor of the appellant, setting aside the ITAT and AO's orders and restoring the CIT (A)'s decision to allow the claim.
10. No contrary decisions were presented to challenge the appellant's entitlement to the additional depreciation adjustment.
11. The Court concluded in favor of the appellant, allowing the appeal with no order as to costs and directed the issuance of an urgent certified copy of the order.

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