The assessee claimed deduction of an amount representing gain on cancellation of forward contracts relating to capital assets lying in capital work in progress. The Assessing Officer disallowed the unrealised foreign exchange gain. The Tribunal held that the assessee had reduced an amount of at the computation stage. The gains on the cancellation of forward contracts are a capital receipt and not a revenue receipt. The High Court while affirming the finding set aside the observation in the order of the Tribunal\u00a0 and held that the foreign exchange fluctuation related to the interest portion was to be treated as revenue receipt and brought to tax. The amendment of section\u00a043A\u00a0of the\u00a0Income-tax Act, 1961\u00a0by the Finance Act, 2002 with effect from April 1, 2003 is not clarificatory and would\u00a0 apply prospectively. Under the unamended section\u00a043A, adjustment to the actual cost takes place on the happening of a change in the rate of exchange, whereas under the amended section\u00a043A, the adjustment in the actual cost is made on cash basis. In other words, under the unamended section\u00a043A, actual payment was not a condition precedent for making necessary adjustment in the carrying cost of the fixed asset acquired in foreign currency but under the amended section\u00a043A, with effect from April 1, 2003, such payment of the decreased or enhanced liability on account of fluctuation in foreign exchange rate has been made a condition precedent for making adjustment in the carrying amount of the fixed asset. (AY. 2009-10)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 43A : Rate of exchange-Foreign currency-Cancellation of forward contract-Capital receipt-Interest portion assessable as revenue receipt-Actual cost of assets-Amendment with effect from 1-4-2003 is not retrospective-Actual payment not condition precedent for adjustment in cost of fixed asset acquired in foreign Currency. [S. 4, 28(1)] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-23400","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-65q","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/23400","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=23400"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/23400\/revisions"}],"predecessor-version":[{"id":24837,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/23400\/revisions\/24837"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=23400"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=23400"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=23400"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}