Forex gain on aquisition of capital asset from outside india

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Accountant
28 Points Posted on 26 September 2016

Query is,

we paid advance for asset of 1,000 USD (1,000*60 = INR 60,000) in Apr 2015

we aquired the asset on 1st June 2015 for 1,000 USD (1,000*65 = INR 65,000) with Forex gain of INR 5,000 So, in this case please let me know the treatment of FOREX GAIN (Revenue or Capital nature) in the ACCOUNTS as well as in INCOME TAX

AS 11 or Sec 43A (IT Act)

Thanks

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On 26 September 2016 at 15:37 Report
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Practising CA
8954 Points Posted on 27 September 2016
The concept of exchange difference arises only when there is positive difference between date of purchase and date of payment and not vice versa. Simply put , cost of asset will be the amount of advance paid. There is no forex gain.
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On 27 September 2016 at 00:42
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Practising CA
8954 Points Posted on 27 September 2016
In case of advance payments , Cost of the asset will be equal to amount of advance paid. Thus there is no foreign exchange gain.
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On 27 September 2016 at 00:45

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