Judgment :- JANARTHANAM J. Sarathy Palayacot Co., Cuddalore, is a registered firm. It has a branch at Singapore. It manufactures goods at Madras and effects sale of its products at Singapore, through its branch there In computing the income of the previous year ended April 13, 1974, corresponding to the assessment year 1975-76, the assessee's assessable profits at the branch at Singapore were to the tune of 1, 07, 339 Singapore dollars, which were converted in Indian currency at Rs. 244 per hundred Singapore dollars and valued at Rs. 1, 69, 143 in the profit and loss adjustment statement. The Income-tax Officer was of the view that the conversion should have been at the rate of Rs. 387 per hundred Singapore dollars, which were prevalent during the said period and he accordingly made an addition of Rs. 1, 53, 494. On appeal, the Commissioner of Income-tax (Appeals)-III, Madras 34, noted that there was an Instruction No. 1154, dated March 10, 1978, issued by the Central Board of Direct Taxes to the effect that in respect of the income, which has accrued, arisen or received prior to November 1, 1977, the rate of exchange provided in rule 115 of the Income-tax Rules, 1962, before its amendment, was to be applied and that the rule at that time required conversion, by taking pound 1 sterling = Rs. 18 and (2) U. S. $ 1= Rs. 7.50. He accordingly directed the Income-tax Officer to apply the provisions contained in rule 115 of the rules and recompute the total income. The Revenue appealed. But the Appellate Tribunal declined to interfere, because it was not possible to appreciate the reason why the Revenue should appeal against a direction to follow the instructions given by itself. In other words, the Appellate Tribunal refused to entertain the appeal on this point, as it was not maintainable, a position which is in conformity with the decision of the Supreme Court in Varghese (K. P.) v. ITO. The merits of the case was not therefore discussed by the TribunalOn these facts, the question as below has been referred to this court under section 256(2) of the Income-tax Act, 1961 (Act No. 43 of 1961). The merits of the case was not therefore discussed by the TribunalOn these facts, the question as below has been referred to this court under section 256(2) of the Income-tax Act, 1961 (Act No. 43 of 1961). "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in directing the Income-tax Officer to apply the provisions contained in rule 115 for conversion of the Malaysian dollars into Indian rupees ?" Arguments of Mr. S. V. Subramaniam, learned senior standing counsel for income-tax cases, representing the Revenue, and Mr. R. Kannan learned counsel appearing for the assessee, were heard The old rule 115 of the Rules reads as under: "115. Rate of exchange for conversion into rupees of income expressed in foreign currency.---The rates of exchange for the calculation of the value in rupees of any income shall be as follows (a) in respect of income accruing or arising or deemed to accrue or arise to the assessee or received or deemed to be received by him or on his behalf before the 6th day of June, 1966--- (i) 1 sh. 6. d = Re. 1 ; (ii) U.S. $1 = Rs. 4.762 ; (b) in respect of income accruing or arising or deemed to accrue or arise to the assessee or received or deemed to be received by him or on his behalf on or after the 6th day of June, 1966--- (1) where such income accrues or arises or is deemed to accrue or arise to the assessee or is received or deemed to be received by him or on his behalf--- (i) before the 19th day of November, 1967, pound 1 sterling = Rs. 21 ; (ii) after the 18th day of November, 1967, pound 1 sterling = Rs. 18 ; (2) U. S. $ 1 = Rs. 7. 50." The old rule 115 was substituted by a new rule in its place by the Income-tax (Seventh Amendment) Rules, 1990, with effect from April 1, 1990, and the new rule so amended runs as under "115. 18 ; (2) U. S. $ 1 = Rs. 7. 50." The old rule 115 was substituted by a new rule in its place by the Income-tax (Seventh Amendment) Rules, 1990, with effect from April 1, 1990, and the new rule so amended runs as under "115. (1) The rate of exchange for the calculation of the value in rupees of any income accruing or arising or deemed to accrue or arise to the assessee in foreign currency or received or deemed to be received by him or on his behalf in foreign currency shall be the telegraphic transfer buying rate of such currency as on the specified date. Explanation.---For the purposes of this rule, --- (1) 'telegraphic transfer buying rate' shall have the same meaning as in the Explanation to rule 26 ; (2) 'specified date' means--- (a) in respect of income chargeable under the head 'Salaries', the last day of the month immediately preceding the month in which the salary is due, or is paid in advance or in arrears ; (b) in respect of income by way of 'interest on securities', the last day of the month immediately preceding the month in which the income is due ; (c) in respect of income chargeable under the heads 'Income from house property', 'Profits and gains of business or profession' (not being income referred to in clause (d)) and 'Income from other sources' (not being income by way of dividends and 'interest on securities'), the last day of the previous year of the assessee ; (d) in respect of income chargeable under the head 'Profits and gains of business or profession' in the case of a non-resident engaged in the business of operation of ships, the last day of the month immediately preceding the month in which such income is deemed to accrue or arise in India ; (e) in respect of income by way of dividends, the last day of the month immediately preceding the month in which the dividend is declared, distributed or paid by the company ; (f) in respect of income chargeable under the head 'Capital gains', the last day of the month immediately preceding the month in which the capital asset is transferredProvided that the specified date, in respect of income referred to in sub-clauses (a) to (f) payable in foreign currency and from which tax has been deducted at source under rule 26, shall be (the date on which the tax was required to be deducted under the provisions of the Chapter XVIIB). (2) Nothing contained in sub-rule (1) shall apply in respect of income referred to in clause (c) of the Explanation to sub-rule (1) where such income is received in, or brought into India by the assessee or on his behalf before the specified date in accordance with the provisions of the Foreign Exchange Regulation Act, 1973 (46 of 1973)." Explanation 1 under the above rule prescribed that" telegraphic transfer buying rate" shall have the same meaning as in the Explanation to rule 26. The Explanation appended to rule 26 reads as under: "For the purposes of this rule, 'telegraphic transfer buying rate', in relation to a foreign currency, means the rate or rates of exchange adopted by the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), for buying such currency, having regard to the guidelines specified from time to time by the Reserve bank of India for buying such currency, where such currency is made available to that bank through a telegraphic transfer." In the instant case, the assessment is relatable to the assessment year 1975-76 for the previous year ended on April 13, 1974. Therefore, the old rule alone is applicable to the facts of the instant case and not the substituted rule, which came into effect from April 1, 1990. The old rule 115 prescribes conversion rates for pound sterling and U.S. dollar into Indian rupees and did not at all provide for conversion rates for currencies of other countries. The moot question that arises for consideration, in such a situation, is as toWhether the old rule 115 is applicable to conversion of Malayasian dollars into Indian currencies ? It is not as if such a question did never arise for consideration, anterior in point of time and the plain fact is that such a question arose for consideration before a Division Bench of this court, in the case of S. M. Syed Mohsin v. CIT. (a) In that case, the question posed for consideration was whether rule 115 applies to all income earned in foreign currency including the currencies mentioned therein. (b) The conversion of Ceylon rupees into Indian currency was involved for consideration. (c) The argument projected by learned counsel for the assessee is reflected as below. (i) Learned counsel for the assessee submitted that this rule (clause (b)(1)(ii)) is applicable only to the income earned either in a country with a sterling currency or in a country with. a dollar currency, i.e., either in Great Britain or the U.S. and that the rule would not apply to the conversion of income earned in any other country. His further submission was that if rule 115 did not apply, then the Exchange Control Regulations would apply so as to convert the income at the rate of exchange prevailing on the last day of the previous year. His further submission was that if rule 115 did not apply, then the Exchange Control Regulations would apply so as to convert the income at the rate of exchange prevailing on the last day of the previous year. His point was that the assessee has to be taxed only on the real. income and not on any notional income based on a formula, which does not correspond to the facts. (d) The arguments so projected were, however, repelled by Sethuraman and Balasubramanyan JJ., constituting the Bench as below, "We are unable to agree with these submissions. Rule 115 opens with the words, 'the rate of exchange for the calculation of the value in rupees of any income'. The word 'any' underlined' by us would clearly show that it deals with the income earned in any place and liable to be taxed in India. The attempt of the learned counsel for the assessee was to show that this expression 'any income' would refer only to the source of income and not to the place of origin. The language of the rule does not appear to suggest this construction. The rule-making authority was to make a rule in order to provide for the conversion of income earned in any foreign currency. The idea was to fix a rough and ready method so that the Income-tax Officer had not to hunt for himself the prevailing exchange rates of different currencies in relation to the Indian currency at different points of time." The rule as above is applicable on all fours to the facts of the instant case. What the Income-tax Officer, in the instant case has to do in applying the said rule is that he has to convert the Malaysian dollars into U.S. dollars at the rate prevailing then and then convert the US dollars, into Indian currency at the rates prescribed in the said rule. This is exactly what the Appellate Tribunal had done and in such state of affairs, it cannot at all be stated that the Appellate Tribunal was not justified in directing the Income-tax Officer to apply the provisions contained in rule 115 for conversion of Malaysian dollars into Indian rupees. For the reasons, as above, the question is answered in the affirmative and against the Revenue. This tax case (reference) is thus disposed of. For the reasons, as above, the question is answered in the affirmative and against the Revenue. This tax case (reference) is thus disposed of. There shall, however, be no order as to costs, on the facts and in the circumstances of the case.