Foreing Currency Exchange Gains - Income Tax

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S. Rajagopalan (Querist)
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11 September 2007 Could someone please explain Income Tax treatment of Gains on foreign currency fluctuation. ITO wants to assess the same as Income from Other sources for a software company enjoying exemption u/s 10B ( STPI registered unit ). We say it is business income and hence exempt from tax for AY 2005-06.Is our stand correct

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CMA Gul S

CMA Gul S (Expert)
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13 September 2007 Hello Mr Rajagopalan,

The ITO is correct this is Income from other sources and cannot be termed as business income. This is indirect income and a P/L item.