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Foreign Exchange Fluctuation Loss whether deductable

Tax queries 3610 views 3 replies

I have made the provision for Foreign Exchange Fluctuation Loss as on 31/03/2009 in profit and Loss A/c. for long term Foreign Currency Loan outstanding as per AS-11.

The Loan was taken for a Capital Project which is completed and and the Interest Cost is now expensed out.

Whether the Provision for Foreign Exchange Fluctuation Loss will be allowed as deduction in Income Tax?

Replies (3)

provision for foreign exchange fluctuation loss will not be allowed as deduction in income tax. Deduction in income tax will be allowed only for loss arising on repayment of loan i.e loss recognised and not for unrecognised loss.if loan is related to capital item then exchange loss will be added to WDV of assets and in other case allowed as deduction.

Mr.Vipul Bubna

Please go through Section 43A of Income-tax Act, 1961.  You will get clarification.

Best Wishes

Sathikonda

Dear Vipul sir,



Forex losses are admissible as they are consistent with the mercantile system of accounting. There are case laws which i wil provide if u require... (U'll have to give me time.)

But i urge please adjust the cost of assets if any under section 43A, then claim the losses


See this link for now


https://www.thehindubusinessline.com/mentor/2009/05/18/stories/2009051850711100.htm


CCI Pro

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