| Case ID |
73f4ff38-e87f-4a3b-ac21-515d92846cd5 |
| Body |
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| Case Number |
IT REFERENCE No. 81 OF 1976 |
| Decision Date |
Jun 09, 1981 |
| Hearing Date |
|
| Decision |
The court held that the method of accounting maintained by the assessee, a sterling company, was not valid under the Income-tax Act, 1961, as the profits and gains arising in India must be determined in Indian rupees. The written down value of fixed assets should be determined based on the rate of exchange with reference to the date of acquisition of the assets. The Additional Commissioner’s order to revise the assessment was upheld, emphasizing that depreciation must be computed in terms of rupees, reflecting the actual cost of the assets as they were used in India. |
| Summary |
In the case of Calcutta Electric Supply Corpn. Ltd. v. Addl. Commissioner of Income tax, the Calcutta High Court examined the accounting practices of a sterling company operating in India. The central issue was the method of accounting used by the company, which maintained its accounts in sterling while conducting business in Indian rupees. The court ruled that the Income-tax Act, 1961 mandates that profits and gains be calculated in Indian currency, regardless of the currency in which accounts are maintained. The judgment clarified that the written down value of fixed assets should be determined based on the exchange rate at the time of acquisition, ensuring compliance with Indian tax laws. This case underscores the importance of adhering to local accounting standards and tax regulations, especially for foreign entities operating in India. Keywords: Income-tax Act, accounting methods, depreciation, foreign companies, Indian rupees, tax compliance. |
| Court |
Calcutta High Court
|
| Entities Involved |
|
| Judges |
SUBRAMANIAN POTI, ACTG. C.J
|
| Lawyers |
Dr. D. Pal,
A. Roy Chowdhury,
S. Sen
|
| Petitioners |
Calcutta Electric Supply Corpn. Ltd.
|
| Respondents |
Addl. Commissioner of Income tax
|
| Citations |
1982 SLD 1111,
(1982) 136 ITR 777
|
| Other Citations |
Riverside (Bhatpara) Electric Supply Co. Ltd. v. CIT [1977] 109 ITR 399 (Cal.),
CIT v. Saharanpur Electric Supply Co. Ltd. [1977] 109 ITR 545 (All.),
CIT v. Bassein Electric Supply Co. Ltd. [1979] 118 ITR 884 (Bom.),
Chainrup Sampatram v. CIT [1953] 24 ITR 481 (SC),
Seth Gurumukh Singh v. CIT [1944] 12 ITR 393(Lahore)
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
145,
43(6),
263
|