Commissioner of Income Tax vs Lloyd''s Register of Shipping ''Kripanidhi''

S.K. Desai, J.—The question referred to us by the Tribunal at the instance of the Commissioner is as under: Whether, on the facts and in the circumstances of the case, the sums of Rs. 6,34,762 and Rs. 1,12,460 are allowable as business expenditure or business losses in computing the assessee''s income for the previous years ending on 30-6-1968 and 30-6-1969, respectively?

Broadly speaking, the factual position in this reference is very similar to IT Reference No. 55 of 1974 which we have disposed of earlier today and we have rejected the contentions advanced on behalf of the Commissioner and found for the assessee. The same result must follow in the instant case also.

Certain expenses became payable by the Indian branch, that is, the assessee, for the years ending 30-6-1964 and 30-6-1965. The amounts were remitted to the head office in United Kingdom in August 1967. In the mean time the rupee had been devalued and in the course of making the remittance, the assessee was required to spend an excess amount of Rs. 6,34,762. The head office received the identical quantum of pounds which it was entitled to receive but the assessee was required to pay more to the Reserve Bank or other foreign exchange dealer. It may be pointed out that in the next year, that is'', the previous year ending on 30-6-1969, a similar amount of Rs. 1,12,460 which was required to be expended to make the remittance was claimed as the net loss by the assessee. The claim of the assessee was rejected by the ITO and the rejection was upheld by the AAC on identical pleas which we have rejected in our judgment given in IT Reference No. 55 of 1974. The Tribunal decided in favour of the assessee for the same reasons as have appealed to us, in IT Reference No. 55 of 1974. We think that in the instant case also, the Tribunal was right in upholding the claim of the assessee and, accordingly, we confirm its decision. We may note that the Tribunal had in fact followed its earlier decision which we have approved and confirmed. In the result, the question referred to us is answered in the affirmative and in favour of the assessee. The Commissioner to pay the costs of the reference to the assessee.