S.P.Goyal, J.

1. The assessee, a closely held company, is engaged in the manufacture and sale of hosiery and textile needles. After obtaining approval of the Government of India in 1961, it raised a loan of Rs. 55 lakhs from Messrs. Groz-Beckert International, a Swiss Company. During the assessment year 1973-74, it paid the second instalment of the loan and claimed loss of Rs. 91,366 on its remittance because of the devaluation of the Indian currency twice, once in the year 1966 and again in the year 1971. Both these items of Rs. 76,666 and Rs. 14,700 were disallowed by the Tribunal holding it to be an expenditure of capital nature.

2. The assessee increased its share capital from Rs. 45 lakhs to Rs. 1 crore and for doing so paid a fee of Rs. 8,250 under the Companies Act. This expenditure was claimed as business expenditure by the assessee. Its claim was turned down up to the Tribunal stage. However, on application by the assessee, the following three questions were referred to this court with the statement of the case :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in disallowing the claim for loss of Rs. 76,666 on account o