REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.7223 0F 2008

OIL & NATURAL GAS CORPORATION LTD.,

DEHRADUN THROUGH MANAGING DIRECTOR

—

APPELLANT

VERSUS

THE COMMISSIONER OF INCOME TAX,

DEHRADUN

—

RESPONDENT

WITH

[CIVIL APPEAL NOS.7224, 7225,

7228, 7229 AND 7231 OF 2008]

J U D G M E N T

D.K. JAIN, J.:

1.In these appeals, essentially the following two questions arise

for our consideration:-

(i)

Whether on the facts and circumstances of the case,

the additional liability arising on account of

fluctuations in the rate of exchange in respect of

loans taken for revenue purposes could be allowed as

deduction under Section 37(1) of the Income Tax, Act,

1961 (for short “the Act”) in the year of fluctuation

in the rate of exchange or whether the same is

allowable only in the year of repayment of such

loans?

(ii)

Whether the Assessee is entitled to adjust the actual

cost of imported capital assets acquired in foreign

currency on account of fluctuation in the rate of

exchange at each balance-sheet date, pending actual

payment of the varied liability