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2012 (11) TMI 896 - AT - Income TaxWhether in the case of Government securities, interest accrues on day to day basis or only on the coupon dates – Held that:- Interest accrues only on the specified coupon dates and not on day to day basis - in favour of the assessee Disallowance of loss on unmatured foreign exchange contracts – Held that:- If the date of maturity of the contract falls within the same financial year then the difference between the exchange rate as prevailing on the balance sheet date and contracted rate is an allowable deduction - forward foreign exchange contract creates a continuing binding obligation on the date of contract against the assessee to fulfill the same on the date of maturity and it is in the nature of hedging contract because it is a contract entered into against possible financial losses - where a forward contract is entered into by the assessee to sell the foreign currency at an agreed price at a future date falling beyond the last date of accounting period, the loss is incurred to the assessee on account of evaluation of the contract on the last date of the accounting period i.e. before the date of maturity of the forward contract - loss on unmatured foreign exchange contract have to be allowed as deduction Disallowance u/s. 43B of interest accrued but not due on subordinated debts – Held that:- Interest can only be allowable when the same is actually paid and not merely because the same is due as per the method of accounting adopted by the assessee - Assessee cannot on the one hand say that interest liability has accrued under the mercantile system of accounting and on the other hand say that for the purposes of Sec. 43B(d) of the Act, the interest is not payable - in favour of the Revenue
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