Market to market loss on the balance sheet date allowable
This query is : Resolved
Dhaval Desai
(Querist)
14 May 2009
I made a sale of $10,000/- on 25th march 2009 where the rate was Rs.49
therefore entry passed
debtors a/c db 4,90,000
to sales a/c 4,90,000
now i have not received the money as on 31.03.2009 therefore i restate the debtors to the rate as on 31.03.2009 where the rate was Rs.45
foreign exchange loss a/c db 40,000
to debtors a/c 40,000
IS THE FOREIGN EXCHANGE LOSS OF Rs.40,000 ALLOWABLE UNDER INCOME TAX ACT
support ur answer by necessary notification/circulars/judgement etc.
therefore entry passed
debtors a/c db 4,90,000
to sales a/c 4,90,000
now i have not received the money as on 31.03.2009 therefore i restate the debtors to the rate as on 31.03.2009 where the rate was Rs.45
foreign exchange loss a/c db 40,000
to debtors a/c 40,000
IS THE FOREIGN EXCHANGE LOSS OF Rs.40,000 ALLOWABLE UNDER INCOME TAX ACT
support ur answer by necessary notification/circulars/judgement etc.
chetan soni
(Expert)
14 May 2009
Yes this is allowed under income tax act. This don't need to be supported by the case law/circular/notification.
It is prudent account concept, you can claim that.
It is prudent account concept, you can claim that.
taxindiaconnect
(Expert)
14 May 2009
Dear,
Under Income tax act any forign gain or loss on account of revenue transaction, either reliased or unrealised is taxable or allowable as the case may be. You can take support from Delhi ITAT decision in the case of ONGC and Maruti India. Since in this exaple the loss is due to ssle transcaion, sale being a revenue transactions, losses are fully allowable. For further clarification let me know.
Under Income tax act any forign gain or loss on account of revenue transaction, either reliased or unrealised is taxable or allowable as the case may be. You can take support from Delhi ITAT decision in the case of ONGC and Maruti India. Since in this exaple the loss is due to ssle transcaion, sale being a revenue transactions, losses are fully allowable. For further clarification let me know.
CA Nitin Wadhwani
(Expert)
14 May 2009
In my opinion, since the loss is not actual, it is not allowable.
The relevant judgement is R.D tradelink V/s Mumbai ITAT.
The relevant judgement is R.D tradelink V/s Mumbai ITAT.
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