<h1>Supreme Court Rules Foreign Exchange Losses from Currency Translation Deductible; Distinguishes Investments from Loans in PSCs.</h1> The Supreme Court addressed whether foreign exchange losses from currency translation are deductible under income tax law. The Department argued these were not actual losses but mere book entries, as loans in USD were repaid in the same currency at prevailing exchange rates. The Court, however, found no merit in this argument, emphasizing that 'Cash Call' contributions are investments, not loans. The Court concluded that foreign currency translation losses should be recognized, allowing the assessee to claim deductions. This decision highlights the distinct regime of Production Sharing Contracts (PSC) and their treatment of foreign exchange transactions.