Foriegn exchange loss whether allowable under this case

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Dhaval Desai (Querist)
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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)
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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

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CA.Tarun Maheshwari

CA.Tarun Maheshwari (Expert)
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19 May 2009 Very well answered by Rajesh Ji with nice supportings. I agree with him.

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CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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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

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