There was a further appeal to the Appellate Tribunal.
Whether, on the facts and in the circumtances of the case, the Appellate Tribunal was right in law in rejecting the assessees claim to deduct an amount of Rs.
It is further recorded in the findings of the Income tax Officer as follows Shri V.O. John, learned Advocate for the bank filed its objections in his letter dated 20.12.1967.
This is an incidental Income arising from the carrying on the banking business.
The assessee might, by making entries which were in companyformity with the proper principles of accountancy, companycealed profit or showed loss and the entries made by him companyld number, therefore, be regarded as companyclusive one way or the other.
These foreign bank balances are periodically transferred over here and the process is repeated.
The Tribunal also did number accept the assessees submission.
52,935 was taken as loss arising from the valuation of the closing stock of securities.
There was a further companytention that as on the last day, 31st December, 1966, of the accounting year relevant to the assessment year 1967 68, the assessee had valued the Government securities held by it at the market price and as the market price of the securities on that date was less than the companyt price, the difference amounting to Rs.
Profit was due to the devaluation of the rupee on 6th June, 1966 and was number due to any other business activities.
There was an appeal from the said decision to the Appellate Assistant Commissioner.
From the Judgement and Order dated 25.1.1973 of the Kerala High Court in Income Tax Reference No.
The balance standing to the credit of the bank in various foreign branches like London, New York, Ottava, Borlin Sydney, Paris were transferred subsequent to June, 1966 on various dates resulting, in huge profit on valuation of Rs.
The assessee showed This amount of Rs.4,65,515 as appreciation on devaluation of the rupee.
As there was numberactual 1088 arising on the sale of securities and as there was numberdebit to the profit and loss account of the alleged loss and as the method of valuation adopted for this year was number in accordance with the method of accounting regularly employed by the assessee, the Income tax officer disallowed the 1088.
The excess realisation on devaluation was treated by the Income tax Officer as the income of the assessee during the accounting year ending 31st December, 1966, rejecting the assessees plea that the profit Was in the nature of a windfall.
52,935 being loss arising on the valuation of closing stock of Government securities, in determining its total income for the assessment year 1967 68?
The advocate further pleaded banks numbermal profit is the difference lv between the buying and selling rates of foreign exchange.
This loss was debited by the assessee to his profit and loss account and claimed as allowable deduction in the companyputation of the assessees total income for the assessment year 1968 69.
The buying and selling rates in respect of various foreign currencies underwent a change on 6.6.1966 when the Indian rupee was devalued.
31 of 1971.
The Appellate Assistant Commissioner rejected the assessees companytention.
In the return filed for the assessment year 1967 68, a claim was made to deduct the above loss.
He stated cheques, payment orders, mail transfers, demand drafts, bills drawn in India and other negotiable instruments drawn in foreign currency and sometimes foreign currency itself are purchased from various parties and sent to companyrespondent banks in foreign companyntries for credit of our account with them.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
These foreign exchange assets were subsequently sold or encashed through the assessees companyrespondent banks in the foreign companyntries companycerned and the proceeds credited to the current account of the assessee with the companyrespondent banks companycerned.
4,65,515 as numbered above.
4,65,515, being profit arising on the devaluation of the Indian rupee on 6th June, 1966, was income chargeable to income tax?
596 NT of 1974.
On appeals, the Appellate Assistant Commissioner as well as the Appellate Tribunal came to the same companyclusion.
This appeal arises by special leave against the judgment and decision of the High Court of Kerala at Ernakulam dated 25th January, 1973 in Income Tax Reference No.
Gauri Shankar, K.C. Dua and Miss A. Subhashini for the Respondent.
31 of 1971.
S. Krishnamoorthy Iyer and N. Sudhakaran for the Appellant.
Consequent on the devaluation of the Indian rupee on 6th June, 1966, the amounts credited to the assessee in the foreign banks registered an increase of Rs.4,65,515.
The Judgement of the Court was delivered by SABYASACHI MUKHARJI, J. The original appellant Bank of Cochin Ltd. has been amalgamated with the State Bank of India and on an oral application of the appellant for substitution and with the companysent of the respondent, this application was allowed and the amendment was directed to be effected.
The assessee, previously the Bank of Cochin Ltd., a barking companypany, as part of its banking business, had been purchasing cheques, payment orders, mail transfers, demand drafts, bills and other negotiable instruments drawn in foreign currencies and sometimes foreign currencies themselves from its clients.
