COMMR.OF INCOME TAX,RAJKOT vs M/S GUJARAT SIDDHI CEMENT LTD.

The Supreme Court upheld the decision of the Gujarat High Court regarding the applicability of Section 43A of the Income Tax Act, 1961, in relation to foreign exchange fluctuations affecting the cost of plant and machinery. The Court clarified that Section 43A(1) applies only when there is a liability increase or decrease due to foreign exchange rates in the previous year, and that investment allowance under Section 32A cannot be claimed for assets installed in earlier years. The appeal was dismissed, affirming the Tribunal's ruling that allowed the assessee's claim based on the precedent set in Commissioner of Income Tax v. Gujarat Fertilizers.