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LOSS ON VALUATION OF INTEREST RATE SWAP CONTRACTS DEDUCTIBLE?

Income Tax - Direct Tax Code - DTC - By: - Mr.M. GOVINDARAJAN - Dated:- 15-9-2015 - Traditionally, the exchange of one security for another to change the maturity (bonds), quality of issues (stocks or bonds), or because investment objectives have been changed. Recently, swaps have grown to include currency swaps and interest rate swaps. An interest rate swap (IRS) is a liquid financial derivative instrument in which two parties agree to exchange interest rate cash flows, based on a specified no .....

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gaged in the business of investment, share broking and Government securities. It is a member of the Bombay Stock Exchange and National Stock Exchange. The return of the assessee was selected for scrutiny assessment. The Assessing Officer noticed that an amount of ₹ 18,29,87,255/- has been debited to loss on swaps being marked to market loss as on 31.03.2008. The assessee was asked to explain and justify the same. The assessee gave explanation to the Assessing Officer that the outstanding i .....

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stent and definite in making entries in the account books in respect of losses and gains and accordingly denied the claim of the deduction. Aggrieved against the order of the Assessing Officer, the assessee filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) confirmed the disallowance treating the same as contingent liability. The appeal was filed before the Tribunal against the findings of the Commissioner (Appeals). Before the Tribunal the assessee explained the natur .....

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