Foreign Exchange Fluctuation

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SHREYANSH B SHAH (Querist)
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03 June 2011 Hi expert .. Can u Please give me the Reference of Section of Income Tax Act regarding allowability of Foreign Exhange loss..... And also refer me one legal Dicision on allowability... Please give fast reply as much as possible

Rakesh Jain

Rakesh Jain (Expert)
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03 June 2011 Dear Shreyansh,

If you are talking about the exchange loss on Assets purchasedd than there are some provision for treatment of exchange gain or loss in Sec. 43A.

With Regards,

SHREYANSH B SHAH

SHREYANSH B SHAH (Querist)
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04 June 2011 No sir I am Talking about Purchase Sale Transaction Whether Foerign Exchange loss on that allowable......

Rakesh Jain

Rakesh Jain (Expert)
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08 June 2011 Dear Shreyansh,

There is no specific section in Income Tax Act for such kind of Transaction.
Since it is not a nature of specific expense so we can not say this can be caimed u/s 37 (i.e. general deduction. but charging section of B & P (Sec 28)covers the said transaction. Sec 28 says -

"The following income shall be chargeable to income-tax under the head “Profits and gains of business or profession”—

(i) the profits and gains of any business or profession which was carried on by the assessee at any time during the previous year....

"The expression ‘profits and gains’ has to be understood in its commercial sense and there can be no computation of such profits and gains until the expenditure which is necessary for the purpose of earning the receipts is deducted therefrom."

By scope of Sec. 28 the Exp of Exchange loss can be claimed.

With Regards,

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