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As-11 effect on income tax

Tax queries 303 views 1 replies

In case of an exporter, as per AS-11 the debtors of the firm should be valued at closing rate, so this creates a gain or loss in the books of accounts & this is unrealized gain or loss. So my query is if due to this an unrealized gain has occurred what effect should be given? if we book this gain in P&L & show this as our income, it would be taxable under Income tax, then we have to pay tax on this unrealized gain? is it correct thing to do? or what else can we do ?

Please specify.

Replies (1)

In case of Woodward Governor India (P) LTD SC 2009, it was held that " Profits and gains are required to be computed in accordance with commercial principles and accounting standards (AS-11)"

In that case foreign exchange loss (Related to non cpaital asset) was allowed to be deducted u/s 37(1)

Simillarly such profits are also taxable 


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