A. R. DAVE, M. S. SHAH, D. A. MEHTA, J.

( 1 ) HAVING gone through the judgment of my learned Brother Justice M. S. Shah, in view of the reasons which follow hereinafter we record our opinion.

( 2 ) THE assessee is a Public Limited Company. The Company manufactures Fertilizers and Caprolactum. The assessment years are : 1977-78, 1978-79 and 1979-80, the respective accounting periods being calendar year 1976, 1977 and 1978.

( 3 ) THE assessee entered into a contract for supply of plant and machinery equipments with M/s. Hitachi Zosen of Japan on deferred credit basis. Accordingly, the assessee was required to make payment in instalments over a period of time. The liability for the years under consideration has increased by reason of fluctuation in exchange rate. The assessee claimed the following amounts for each of the years under consideration as allowable business expenditure. (1) Rs. 9,21,658. 00, (2) Rs. 26,49,336. 00, (3) rs. 57,77,322/ -. The claim of the assessee was negatived and it was held that the expenditure in question was capital in nature.

( 4 ) THE assessee preferred an alternative claim that the aforesaid expenditure went to increase the actual cost of the plant and

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