Foriegn exchange loss whether allowable under this case

Save Share

This query is : Resolved

Dhaval Desai (Querist)

19 May 2009 I hav made a sale to a person on 28.03.09 for $1 at that dt INR was Rs.45
debtors A/c 45
To Sales A/c 45

on 31st march the INR was Rs.44 so i restate the debtors to Rs.44 by passing entry
foreign exchange loss A/c 1
To Debtors A/c 1

so whether can i claim this Re.1 loss under the income tax act
pls support ur answer by necessary circulars/notifications/case laws etc

taxindiaconnect

taxindiaconnect (Expert)

19 May 2009 Unrealised loss in your query is tax deductible, since it belong to transaction on revenue account, the same will be charged to P & L Account as per As 11 ( Before amendment) and as per tax the same would also allowed. You can refer to following case list of case decision in this regards.

DCIT vs Maruti Udyog Ltd. - 101 TTJ 760

National Thermal Power Co. Ltd. vs CIT - 1999 157 CTR 249

CIT vs Sun Engineering Works Pvt Ltd - 198 ITR 297

Oil and Natural Gas Corpn. Ltd. vs Dy. CIT - 261 ITR 1; 77 TTJ 387

Silicon Graphics Systems India Ltd. vs ACIT - 105 TTJ 591

Silicon Graphics Systems (I) (P) Ltd. vs DCIT - 106 TTJ 1153

Message likes : 1 times

CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)

19 May 2009 Very well answered by Rajesh Ji with nice supportings. I agree with him.

Message likes : 1 times

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)

19 May 2009 In my opinion, it is not allowable.
The relavant decision is
CIT V/s R.D Tradelink.
Also, it shouldn't be since it is not a incuured loss but a notional loss.
It is disallowed as per Sec.37

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now