Dipak Kumar Sen, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, the following questions have been referred as questions of law arising out of the order of the Tribunal for the opinion of this court: "(1) Whether, on the facts and in the circumstances of the case, the sum of Rs. 5,57,251 was allowable as a revenue loss having regard to the provisions of Section 43A of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the capital employed should mean the cost of acquisition (not written down value) of the assets and also the liabilities and the borrowed moneys for the purpose of relief under Section 80J in respect of the assessee's Deep Sea Fishing Division ? (3) Whether, on the facts and in the circumstances of the case, depreciation should be allowed in respect of assets used by the assessee for scientific research ? (4) Whether, on the facts and in the circumstances of the case, fees of Rs. 2,25,000 paid to the Registrar of Companies in connection with the increase of the authorised capital of the company is capital expenditure and, therefore, not allowable under Section 37 of the Income-tax Act? (5) Whether, on the facts and in the circumstances of the case, surtax paid by the assessee under the Companies (Profits) Surtax Act, 1964, is an allowable deduction from the total income of the assessee ?"
(2.) Of the above questions, question No. 3 has been referred at the instance of the Revenue. The other questions are referred at the instance of the assessee.
(3.) The controversy sought to be raised in question No. 1 is covered by a decision of this court in CIT v. Bharat General and Textile Industries Ltd.. Following the same, we answer the question in the negative and in favour of the Revenue. We hold that the loss caused by additional expenditure incurred by reason of exchange fluctuation is capital in nature.;