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Treatment of Exchange Flucutation on Fixed assets

Tax queries 2436 views 4 replies

HI......

Can Anyone tell me the correct treatment of Exchange Fluctuation on

Payment for Purchase of Fixed Assets from outside

or

repayment of loan taken in foreign currency for purchase of Fixed Assets from outside India

as per Companies Act (SchdVI & AS-11) as well as Income tax Act(Section 43A)?

Replies (4)

As per Companies act, the ECF to be added/Substracted from the asset value.

As per As11, it need to be charged off to P/L Account immediately.

There is a big controversy between these two. However, Companies Act always gets priority over AS.

 Loan taken for purchase of fixed assets , exchange fluctuation need to be charged to P&l account as Government adopted AS11 in AS rules 2006.

What's the treatment as per IT Act, 1961....

 Refer sec 43(A)


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