Treatment of loss due to foreign exchange fluctuations

[Sanjeev Sharma]

There was a loss on account of Foreign Exchange Fluctations on restatement of Foreign currency loan taken for purchase of Land, Building and Machinery ( indegenous) for a manufacturing project. How will it be treated in Income tax ??

AI Summary

Query on Tax Treatment of Forex Losses on Foreign Loans for Capital Assets, Seeking Clarification Beyond Section 43A. A participant raised a query regarding the treatment of losses from foreign exchange fluctuations on a foreign currency loan used to purchase land, buildings, and indigenous machinery for a manufacturing project, questioning its treatment under income tax law. One respondent suggested referring to a Supreme Court decision that allowed deductions for such losses. However, the original poster noted that the case cited involved revenue account losses, whereas their situation involved capital account losses, questioning if these would be entirely disallowed in non-Section 43A situations. The discussion remains unresolved.