1998 (10) TMI 31

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....he assessee is a co-operative sugar mills which had suffered increase in his cost of the machineries installed by the assessee by Rs. 19,78,050 during the asst. yr. 1983-84, on account of the variation in the rate of foreign exchange, the machineries having been imported and the payment being required to be made in foreign currency. The assessee claimed investment allowance for the same. The claim....

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....s assessment year is on the amount of escalation 4. Sec. 32A of the IT Act, 1961 (hereinafter referred to as 'the Act'), deals with investment allowance. It provides for allowance at the rate prescribed therein as a percentage of the 'actual cost' of the ship, aircraft, machinery or plant to the assessee. Sec. 43(1) of the Act defines 'actual cost' to mean the actual cost of the assets to the a....

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....uch 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 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 liabi....

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....f acquisition of the capital asset as aforesaid.' It is not necessary to refer to the Explanations and the other parts of section for the purpose of this reference. 5. It is evident by reason of s. 43A(1) of the Act, the amount by which the liability of the assessee is increased or reduced during the previous year by reason of variation in the rate of exchange as between the Indian currency and....