43a of income tax act

Tax queries 808 views 3 replies

A manufacturing company has purchased an imported machinery through Buyers credit (Foreign Loan).

What treatment should be given to the loss/gain arising out of exchange difference on repayment of Loan U/S 43A of Income Tax Act.

   Please mention applicable case law.

Replies (3)

The exchange difference (relating to principal component) to be added / deducted to/from the WDV of the Asset as & when the principal is actually repaid ....further the same to be reported in Fixed Asset schedule of 3CD report...

no case law  ...because the provision is very clear

The management is considering the loss/gain on foreign exchange till the acquired asset is put to use. They capitalize the same till the date of put to use. But they transfer the loss/gain on foreign exchange to P&L a/c, AFTER the asset is put to use(commercial production started) also when the loan is repaid. Their contention is that repayment of loan does not have any relation ship with asset. So they do not capitalize the loss/gain on foreign exchange. Plz express your views
Originally posted by : Saurabh Maheshwari
The exchange difference (relating to principal component) to be added / deducted to/from the WDV of the Asset as & when the principal is actually repaid ....further the same to be reported in Fixed Asset schedule of 3CD report...

no case law  ...because the provision is very clear

 


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