Foreign exchange loss, Income Tax

[surendra joshi]

A co. received advance in USD from its foreign customer during the previous year. The said advance in reflected in the balance sheet ( Curr.Liab.) as Advance from customer. The said amount is credited in the bank account in INR. As on the date of Balance Sheet,as a result of exchange fluctuations, the liability to the customer increases with devaluation in rupees. Whether such Exchange loss should be accounted in the books as on the date of balance sheet and whether such exchange loss will be allowed as a revenue loss in the year of receipt. The said advance is cleared in the suceeding year by supply of material.

Posts / Replies

[Surender Gupta]

For this purpose, you need to refer the Accounting Standard for revenue recognition and so.