J.K.Ranka, J. - (1.) THIS income -tax appeal is directed against the order of the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (for short, Tribunal) passed in ITA No. 944/Jp/1993 dt. 9 -3 -2000 and pertains to assessment year 1990 -91. The appeal was admitted vide order dt. 15 -11 -2002 on the following substantial question of law : 'Whether on the facts and in the circumstances of the case, the Tribunal was justified in not allowing a liability of Rs. 3,52,776 on account of arising as consequence of foreign exchange rate fluctuation during the year.'
(2.) THE brief facts, as emerging on the face of record, are that the appellant is a limited company and is engaged in the business of manufacturing, selling and export of safety razor blades, safety razors and other shaving products declared an income of Rs. 97,01,592 on 31 -12 -1990. It is claimed that the appellant company is following mercantile system of accounting as required under section 209 of the Companies Act, 1956 and is also following Accounting Standards issued by the ICAI.
(3.) THE short controversy in the present appeal relates to an amount of Rs. 3,52,776 on account of exchange rate difference which was claimed by the appellant. The assessing officer not satisfied with the aforesaid claim, issued a show -cause notice as to why the said amount be not disallowed. It was the claim of the appellant that it had purchased raw material from foreign suppliers and the amount was lying outstanding at the close of the year as a credit balance and as per the accounting system regularly followed foreign currency liability was revalued as on close of the financial year and there was increase in liability to the tune of Rs. 3,52,277 and accordingly it was claimed as an expense.;