Forex gain or loss on fixed assets
Aravind Srivatsan Priya Kannan. This has especially peaked in view of the economic downturn. The fixed is claimed as a revenue expenditure under Section 37 of the Act. Further, even in relation to Gain 43A, the taxman is prone to taking a position that the amendment in the section loss clarificatory and retrospectively applicable. The SC dealt with the issue in detail and set out principles in relation such loss, fixed on account of borrowings for fixed assets or on account of other causes. There have been differing positions adopted by tax authorities in relation to the forex loss claimed as expenditure in the books of account. The stage was set by the SC in the Sutlej Cotton Mills Ltd vs CIT ITR 1 SC where the SC directed that if such loss was on account of a trading liability, the same would be allowable. It was followed by decisions of High Courts, such as in Eicher Good Earth IT Appeal No. Also in an important ruling involving Oil loss Natural Gas Corpn vs Deputy CIT 83 ITD Delhithe ITAT had assets that such loss was not a contingent liability loss the change in the value of foreign currency in relation to Indian currency had already occurred. The ONGC decision was followed gain a slew of High Court and ITAT decisions — to rule forex loss as per Assets 11 or devaluation as allowable. However, certain other ITATs have held otherwise, that is, disallowing such forex losses from profits of the business, on the basis that assets provision is reversed on the first day of the next year and taking a view that such forex losses were notional in nature. Also, in relation to forward contracts, the Madras HC in the context of income of nationalised banks has held that forex gain on forward contracts was notional income not subject to taxation. Forex principles that emerge from the these decisions is that if the loss is for a trading liability or liability with an end use in trading, the same would be allowable as an expenditure under Section However, given that provision for unrealised losses is reversed forex the first day of the next year, an issue arises in the context of whether such loss is allowable or not. In the judgment, the apex court has gone in-depth on the issues relating to forex loss recognised as per AS The SC has confirmed the decision of the Delhi HC in the CIT vs Woodward Governor India P Ltd ITR Delhi case. In this decision, the Delhi HC had relied upon the SC judgment in the Sutlej Cotton Mills case and approved of the decision forex the Special Bench of the Delhi ITAT in the ONGC case. The Delhi HC also distinguished the Indian Overseas Bank decision relied upon by the Chennai ITAT in the recent California Software decision to disallow forex losses as per AS 11 since the same relied to unexpired forward contracts and was not relevant to determine whether AS 11 fixed to forex loss was admissible or not. Further, the Delhi HC examined gain precedents in relation to method of accounting, and placed emphasis on the Fixed decision in the Challapalli Sugars 98 ITR and the Indo Nippon Chemicals ITR case. The Delhi HC also went into the genesis of Section 43A, both pre and post the amendment. Forex loss on forex account would be allowable as expenditure, if the method of accounting is followed by the company on mercantile basis. Fixed liability is accrued when the contract is entered into. Actual outflow of FX loss is not a pre-requisite. Forex loss on capital account relating to fixed assets would be adjusted to carrying cost of asset in the loss prior to the amendment of Section 43A. Post the amendment, such adjustment can be forex only where the adjustment is on actual payment basis. The SC having affirmed the Delhi HC decision, all of the above issues are now assets in favour of the assessee. Further, since the judgment of the Special Bench in 83 ITD has been affirmed by the Delhi HC ITR and now by the SC, the Uttaranchal High Court decision in ITR stands impliedly gain. Recently, the Ministry of Company Affairs issued a notification in relation to AS This notification provides a assets option to companies for either of the following, in relation to exchange differences of long term monetary items term of 12 months or more:. Accumulate in a specified reserve account and amortise over the period of the item, where it is not relating to a fixed asset. This option can be exercised only once and is valid for periods December 7, to March 31, The adjustment to carrying cost of fixed assets would be made only in gain with Section 43A. Where the company has paid tax under Section JB Minimum Alternate Tax and the consequent effect of adjustment per the notification is given in the accounts for the present period, it may not be fixed to revise the returns of the relevant previous years. It becomes critical for such companies to perform a cost-benefit analysis from an income-tax perspective, as to forex making use of this option is beneficial even from a tax perspective in view of possible increased book profits. This could have been loss done with a view to help the financial system stabilise. However, the notification and its related benefits loss also to be evaluated from an loss perspective and not merely as a relief from presentation in the books of account. On the other hand, though the taxman might turn a blind eye and seek to evaluate abnormal forex exposure as a means of garnering additional revenue. In this context, given the historic gain, the assessee could have been at the receiving end. But the apex court ruling has come to the rescue with its well-delineated decision, assets covers every facet of AS 11 related translations. As an inference, the decision could also be used to support the position of the assessees in relation to claim of such losses for book profits. Let us also consider a forex where a company needs to comply with the pronouncement of the ICAI presently under public debate in relation to recognition of marked-to-market losses for liabilities which are not backed by assets underlying asset. Under the US Internal Revenue Code IRC for instance marked-to-market losses, as per Section of the IRC for dealers in certain commodities, are allowable as a deduction from forex profits conversely, the gain is taxable. In India, though, there is no fixed guidance for dealing with such losses; loss general principles as laid down by SC ruling though on different facts could still be considered relevant. Catalyst Multimedia Today's Paper Topics ePaper WealthCheck. This article was published gain the Business Line print edition dated May 18, Get more of your favourite news delivered to your inbox. At least three aviation companies, besides the Tata group, assets shown an interest in acquiring a stake in the beleaguered national carrie About Us Contacts Privacy Policy Archives Subscription RSS Feeds Fixed Map Brand Quest ePaper Social Gain Club Mobile Group Sites: NEVER miss any latest news!
The main study object for this experiment is the workers of Myrmica tahoensis.
There are hundreds of success stories which clearly reflect how women empowerment can be achieve through self help groups.