SABYASACHI MUKHARJI, J.

( 1 ) IN this reference under Section 256 (1) of the I. T. Act, 1961, the Tribunal has referred certain questions of law both at the instance of the assessee as well as at the instance of the Revenue. In order to understand these questions, it is necessary to note that the assessment year involved is the assessment year 1967-68. The assessee had taken a loan of 3,94,433, from the Burmah Oil Co. , London, in 1966, which was free of interest. It was repaid in December, 1966. In the meantime, there was a devaluation of the Indian rupee on the 6th June, 1966. As a result of the devaluation, the assessee had to pay in terms of the Indian currency Rs. 83,24,896 as against Rs. 52,50,000 received by the assessee as the original amount of loan. The extra amount of Rs. 30,74,896 was claimed by the assessee as a loss incidental to its business or as an expenditure under Section 37 of the I. T. Act, 1961. The assessee had also taken another loan of 10,250,000 from the Bank of Scotland on 30th June, 1963. Out of this 163,063 had remained unutilised and was retained in the U. K. The balance amounting to 1,086,937 was utilised by the assessee for the purchase of capital a

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