TAX BENEFIT FOR LOSS DUE TO FOREIGN EXCHANGE FLUCTUATION

The supreme court held that the loss claimed by a company on account of fluctuation in the rate of foreign exchange as on the date of balance sheet is allowable as expenditure under sec 37 of the income tax act. The court as stated so in the appeal case, ONGC vs. Commissioner, where the argument of ONGC was accepted and in the view of authorities was rejected. The judgment also held that ONGC was entitled to adjust the actual cost of imported capital assets, acquired in the foreign currency, on account of fluctuation in the rate of exchange at each of the relevant balance sheet dates pending actual payment of the varied liability. On both counts, the court allowed the appeal on ONGC.