| Case ID |
09aeeb84-e4bf-42ea-9d92-9c70df828bc2 |
| Body |
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| Case Number |
IT Reference No. 127 of 1977 |
| Decision Date |
Jun 24, 1986 |
| Hearing Date |
|
| Decision |
The Calcutta High Court upheld the findings of the Tribunal that excess payments made by the assessee due to fluctuations in exchange rates for a dollar loan raised for purchasing machinery constituted capital expenditure and were not allowable as revenue expenditure. The court acknowledged the significance of the question regarding the alienability of loss arising from devaluation, determining that it was a substantial question of law that warranted a certificate for appeal to the Supreme Court. The court noted that similar questions had previously been referred to the Supreme Court and allowed the application for a certificate, emphasizing the recurring nature of such issues in international transactions. |
| Summary |
In the landmark case of Union Carbide India Ltd. v. Commissioner of Income Tax, the Calcutta High Court addressed significant questions regarding capital versus revenue expenditure under the Income-tax Act, 1961. The case revolved around the excess payments made by the assessee due to fluctuations in exchange rates related to a dollar loan for machinery procurement. The Tribunal had previously classified these payments as capital expenditure, leading to the assessee's appeal for certification to the Supreme Court based on substantial legal questions. The court's decision underscored the importance of clarifying such issues, particularly as they pertain to international transactions, thereby setting a precedent for future similar cases. This case highlights critical aspects of tax law and its interpretation, ensuring that businesses are aware of their obligations and rights concerning capital expenditures and potential losses due to currency fluctuations, a topic of increasing relevance in today's global economy. |
| Court |
Calcutta High Court
|
| Entities Involved |
Commissioner of Income Tax,
Union Carbide India Ltd.
|
| Judges |
Dipak Kumar Sen,
Shyamal Kumar Sen
|
| Lawyers |
Dr. D. Pal,
P.K. Pal,
Miss M. Seal,
B.E. Bagchi,
B.K. Nahan
|
| Petitioners |
Union Carbide India Ltd.
|
| Respondents |
Commissioner of Income Tax
|
| Citations |
1988 SLD 1945 = (1988) 174 ITR 229
|
| Other Citations |
CIT v. South India Viscoss Ltd. 1980 Tax LR 175 (Mad.),
Nawab Sir Mir Osman Ali Khan v. CWT [1986] 162 ITR 888 (SC),
Indian Oil Corpn. Ltd. v. State of Bihar AIR 1986 SC 1780
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
261
|