JUDGMENT

RANGANATHAN, J.:- The devaluation of the Indian Rupee on 6th June, 1966 brought several problems in its wake. One such problem arose out of the consequential enhancement in the liability of an Indian businessman who had imported plant and machinery from abroad, the consideration for which had been fixed in terms of a foreign currency and which had not been fully discharged by the date of devaluation. How this increase in liability has to be (a) accounted for in the books of account of the businessman and (b) taken into account for purposes certain allowances available under the Income-tax Act, 1961, are the two issues that have to be considered in this appeal.

2. A simple hypothetical illustration (steering clear of complications that may arise where the purchase is made by borrowing funds therefore from others, where the price as paid in several instalments, where more than one fluctuation in exchange rate intervener and so on) will serve to bring the problem into focus. Let us consider the case of an income tax assessee, whose previous year ended on 31-3-66, who had placed an order for plant and machinery costing $10,000 on 1-1-1966, at a time when the rupee exchange rate