IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.7272 of 2009 (arising out of SLP (C) No. 5677/09)

The Commissioner of Income Tax,  New Delhi …Appellant(s)

                    versus

M/s Maruti Udyog Ltd. … Respondent

O R D E R

By consent, the matter is taken up and  disposed of.

Delay condoned.

Leave granted.

Though the High Court has admitted the appeal and  

though it has framed questions of law, it is the grievance of  

the Department that the following questions have also arisen  

for determination by the High Court and they have not been  

formulated for decision under Section 260A of the Income Tax  

Act, 1961. The said questions are as follows:

“(i) Whether  the  Tribunal  was  right  in  law  in  holding  that  unutilized  MODVAT  credit  of  earlier  years adjusted in the assessment year in question  should be treated as actual payment of excise duty  under Section 43B of the Income Tax Act, 1961.

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(ii) Whether  the  Tribunal  was  right  in  law  in  holding  that  customs  duty  paid  and  allowed  as  a  deduction under Section 43B cannot be added to the  value of the closing stock.”

To  this  extent,  the  Department  succeeds  and  

accordingly we direct the High Court to decide the above  

questions under Section 260A in the Income Tax Appeal pending  

before it (ITA 1683 of 2006).  

Before concluding, we may state that the Tribunal was  

right in holding that the claim for depreciation on account  

of  enhanced  cost  of  depreciation  due  to  fluctuation  in  

foreign  exchange  rate  was  admissible  for  deduction  under  

Section 37 of the Income Tax Act, 1961 (see our judgment in  

CIT v. Woodward Governor India P. Ltd. reported in [2009] 312  

ITR 254 (SC).  Similarly, the question as to whether interest  

and miscellaneous income is taxable under the head “Income  

from Other Sources” under Section 56 of the Income Tax Act,  

1961 is not required to be examined in this case as the  

Department failed to make submissions on this point before  

the Tribunal.

Accordingly,  the  civil  appeal  is  allowed  with  no  

order as to costs.

......................J.    [S.H. KAPADIA]

......................J.    [AFTAB ALAM]

New Delhi; October 28, 2009