INCOME TAX ACT, 1961

Section 43A Section 37(1)

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Assessee claimed deduction of Rs. 5 crores under the head 'foreign currency monetary item translation difference account'. AO required to substantiate afoesaid claim. Assessee submitted that as per provisions of Accounting Standard-11 (AS-11), issued by ICAI, it recognised losses or gains arising on restatement of long-term foreign currency monetary items . Related to acquisition of depreciable capital asset whether purchased within or outside India, and consequently, depreciation over such asset's balance life. Assessee also pointed out that in financial year ended 31-3-2018, it had a gain/profit consequent to foreign exchange fluctuation which was offered as income in that year. Assessee also pointed out that while claiming depreciation, it had not increased written down value (WDV of fixed assets over which depreciation was claiemd for income-tax purposes. AO relying on section 43A took the view that only when there was actual apyment adjustment on account of fluctuation of foreign exchange currency had to be given effect.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 36(1)(iii)

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