Exchange Rate Gain/Loss - Depreciation

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CA.Tarun Maheshwari (Querist)
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26 June 2009 I imported a macheinery in May 08 for Rs.1 Crore and make payment for that in November 08 and booked a exchange rate loss of Rs. 10 Lacs, so the value of my macheinery become 1.10 croes. Now the question is how will I charge depreciation. On Rs. 1.10 Crores for full year , or on Rs. 1 Crore for full year, and on Rs. 10 Lacs for half year under Income tax act. As well as what shall be the treatment under Companies Act? What if it would have been a gain. Then would the value of depreciation be reversed?

Sanjeev Jain

Sanjeev Jain (Expert)
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26 June 2009 Hie Tarun,

01. you shall be eligible to claim depreciation on the entire amount of 1.10 cr. for full year not for 1.00 cr for full year & for balance for half year.

02. in case of gain the above treatment would be reversed and you can claim dep. on 0.90 cr only.

03. According to AS-11 forex loss or gain will be settled through P & L A/c only but as per recent amendement in As-11 was done by central govt according to which forex loss can be capitalized and the assessee will be eligble to claim dep. on it.

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CA.Tarun Maheshwari

CA.Tarun Maheshwari (Querist)
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26 June 2009 Sir, for first answer, can you give me some reference of section or AS or any other provision. I shall be highly thankful to you.

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