The issue that lies at the heart of

Owing to a steep depreciation in the value of Indian Rupee against the US Dollar, the Government of India, under Section 211 of Companies Act, 1956, issued a notification giving an option to assessees, to either take the entire amount of loss due to exchange rate movement, to the profit and loss account; or to defer the impact of such loss by capitalizing such losses with the cost of the assets so acquired. The Respondent-Assessee, therefore, was of the view that it was for the Respondent-Assessee to decide how it would choose to absorb the impact arising out of exchange rate differences.