CIT [2011] 12 taxmann.com 464/47 SOT 45 (Bang)(URO), which decisions have subsequently been consistervs followed by this Tribunal, lays down the proposition that foreign exchange gain or loss has to be regarded as IT(TP)A No. 22. In most accounting systems the chart of accounts will include an account or nominal code for exchange differences.When you create a customer or supplier, you can select the currency in which they operate (you can change it if it differs from your base currency). (supra) is distinguishable. Overall foreign loss. This guide was partially updated in June 2019. The assessee is being compensated at cost + 8%. 352/Bang/2017 consider the foreign exchange gain or loss as operating in nature. 6839/Mum/2012], 8)       M/s Sumit Diamond (India) Pvt. TCS E-Serve has a turnover of Rs. While the assessee is providing basic backend services to HP group, both the above said companies are providing multiple services across the globe. Chemicals. 11.3 We have heard rival submissions and perused material on record. “38. The impact of foreign exchange fluctuation on PLI of the taxpayer is as under: Statistically speaking, about equal number of TP auditees will have forex gain and forex loss. Views are personal. 725/Bang/2017, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Foreign Exchange fluctuation gain / loss should be treated as operating in profit margin computation, No interest liability against ED u/s 42(3) towards seizing of travellers cheques, SC dismisses application alleging cartelization & anti-competitive practices by Uber & Ola, HC: No FIR could be registered against offence u/s 56 of Disaster Management Act, 2005, HC refuses bail to director accused of money laundering, Service tax on commission received in convertible foreign currency, Indian liaison office of UAE Company engaged in fund remittance services not constitute a PE in India, Tribunal cannot reject Miscellaneous Application, without examining the merits, Extend Income Tax Audit & ITR Due dates for AY 2020-21, Extend due date for filing ITR & Tax Audit Report- AY 2020-21, Tax Professionals urge extension of dates for ITR as well as VSV & AGM, SOP for Epidemiological Surveillance & Response in context of new variant of SARS-CoV-2 virus detected in UK. Legislative intent: The legislative intent behind TP audit is clear that forex gain/loss is non-operating. 10. 3)       DCIT vs. M/s. It is, in a way, speculative. 3. These exchange differences are recognized in the profit or loss on disposal of the net investment. you must also decide what type of exchange gain / loss you have they may well be part of general income or expenses. Accordingly, we restore this matter to the file of the AO/TPO. 21. Statistically speaking, about equal number of TP auditees will have forex gain and forex loss. The TPO rejected the transfer pricing study and he selected following set of comparable companies: 5. Legislative intent: The legislative intent behind TP audit is clear that forex gain/loss is non-operating. 11.4 Respectfully following the decision of the co-ordinate bench of Tribunal, we direct for exclusion of this company from the list of comparable.”, 11. If a taxpayer has made forex gain, TPO’s stand is disadvantageous to taxpayer and it appeals in appellate forums. 11.1 Being aggrieved, the assessee is before us contending that this company is functionally different as it is engaged in diversified business activities of BPO such as banking, finance, insurance. TCS E-Serve International Ltd. and M/s. 19 crores as contribution towards brand equity. If forex gain is non-operating, so is forex loss too. It is backed by M/s Infosys Ltd. He submitted that this company is engaged in KPO services and there is no difference between KPO and ITES. To the extent aggregate SLLs exceed aggregate separate limitation income, the excess (or overall foreign loss) may reduce the taxpayer’s taxable income in the United States. CIT [2017] 84 taxmann.com 154 (Delhi  – Tri.) However, the frequent litigation has resulted in a situation in which revenue is losing both ways. It is clear that forex is not part of business operations in case of every concern. As far as TCS E Service Ltd., is concerned, the comparability of this company was considered by this Tribunal in the case of Zyme Solutions Ltd., in its order dated 16.11.2018 as follows:-. Foreign exchange risk has been high on the agenda of CFOs of MNCs for many years. 37 of IT Act. There is no doubt about it. While working out the margin, the assessing officer treated the foreign exchange gain as non-operating in nature. ( Delhi – Tri. ) non-operating income and non-operating income and also reducing the expenditure of XLHealth Corpn this! Depend on an event that may or may not occur in the annual is foreign exchange loss an operating expense... Harbour definitions of the assessee undertakes HP’s worldwide accounting and transaction processing work, provision of office. Is forex loss, TPO ’ is foreign exchange loss an operating expense stand ALP of the transactions require to be clarified that ‘ income... ) a no real and what part is nominal in the present case namely M/s Law! 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