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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 be .....

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tional amount from a fixed rate to a floating rate (or vice versa) or from one floating rate to another. Interest rate swaps can be used for hedging and speculating. The issue to be discussed in this article is whether the loss on valuation of intere .....

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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 .....

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nterest swap contracts were valued. In case there was a loss in valuation the same is debited to Profit and Loss Account. The transaction of the assessee is akin to foreign exchange derivatives. The Accounting Standard AS - 11 deals with giving of ac .....

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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 (Ap .....

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e of transactions. The assessee contended that mark to market loss is allowed by the Tribunals in many cases. The liability is not a contingent liability as held by the Supreme Court in Commissioner of Income tax V. Woodward Governor India Private Li .....

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