Applicability of depreciation charged off to P/L

[Shashidhar P]

Hi, I have a query with respect of tax audit relating to Capitalisation of exchange difference to Fixed assets as per AS 11 Notification issued by the Govt. in March 2009. My query is for tax audit purpose, whether capitalisation of exchange difference for unrealised loans availed for purchase of Fixed assets should be added to Fixed assets and provide depreciation on that or should be charged off to P&L.

AI Summary

Clarification Sought on Tax Audit Impact of Capitalizing Exchange Differences on Unrealized Loans Under AS 11 Notification A participant raised a query regarding the tax audit implications of capitalizing exchange differences on unrealized loans for purchasing fixed assets, as per AS 11 Notification from March 2009. One respondent questioned the classification of these loans as unrealized, suggesting that clarification is needed on whether the loans have been written off. Another respondent explained that if a loan is taken in foreign currency, the exchange rate difference should be added to the fixed assets, and depreciation should be charged on the total amount. They also sought clarification on the nature of the unrealized loans in question.