COMMISSIONER OF INCOME TAX BOMBAY CITY 1 Vs. TATA LOCOMOTIVE AND ENGINEERING CO LIMITED

JUDGEMENT

(1.) THE following Judgment of the court was delivered by :

(2.) THIS appeal by certificate granted by the High court of Judicature at Bombay under s. 66-A(2) of the Indian Income Tax Act, 1922, hereinafter referred to as the Act, is directed against its judgment in a reference made to it by the Income-Tax Appellate tribunal. The following two questions were referred (1)Whether on the facts and in the circumstances of the case, the surplus or difference arising as a result of devaluation in the process of converting dollar currency in regard to the sum of $36,123/02 repatriated to India was profit which was taxable in the hands of the assessee ? (2)Whether the said sum of $36,123/02 having been taxed in the relevant earlier years, the surplus or difference in dollar exchange account arising by reason of the repatriation thereof as a result of devaluation was rightly taken as profit taxable ?

(3.) THE Income-tax Officer assessed the amount of Rs. 70,147.00 on the ground that it represented profits that arose to the assessee 'incidentally to its carrying on the business'. THE Income-tax Officer observed : 'Whether the funds were sent to America with the object of purchasing of capital equipment or for the purchase of stores, or for reimbursement of revenue expenditure there need not be distinction that only such portion of the profits arising on funds remitted for revenue expenditure only has to be treated as revenue and the balance should be treated as capital.'