AS 11 vis a vis income tax

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manoj mahimkar (Querist)
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12 September 2009 AS 11 states that if there exist outstanding debtors on account of export sales as on 31st March 2009, apply closing rate of relevant foreign exchange and give effect of the same to the amount of said debtors. My question is as follows:

Above effect may result in unrealised foreign exchange gain to loss. Will this gain or loss should be considered for the purpose of determination of tax liability. I feel same should be ignored as the said gain or loss is not realised.

Pls corect me if I am srong

M Prabhakar Menon

M Prabhakar Menon (Expert)
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12 September 2009 At the time of debiting the customer's a/c u must have given some value that is final as far as accounting is concerned

ARUN KUMAR V

ARUN KUMAR V (Expert)
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12 September 2009 Since the debtors are valued for complying with AS, it has no effect for tax liability.
So no profit or gain shall be considered arising from this for tax liability.
But this have effect for AS 22, deffered tax. It should be taken care of.

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manoj mahimkar

manoj mahimkar (Querist)
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12 September 2009 Dear Sir,

in continuation to my query, i would provide the same in exmaple form.

export sales reported when USD rulling at 46.00 sales bill amounting to USD 100000/- was raised on 20th February 2009. As on 31st March 2009, the same was outstanding. However the dollar rate as on 31st March 2009 was 50/-. Hence there was unrealised gain of Rs. 400000/-. Should it be recorded or to be ignored?. If ignored, there would violation of AS11.

CA. Bikash Bogi

CA. Bikash Bogi (Expert)
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15 September 2009 it was in the nature of revenue & falls in section 37(1) of the income tax act as per ruling of supreme court in woodword governor ltd.