taxtion of exchange gain

Yes,  taxable as business income if it is arised during the business.

Yes,  taxable as business income

gain on revenue account is taxable under section 28 on accrual basis and in case of loss vice

versa however increase /decrease in cost of depriciable assest due to exchange fluctuation

is added /deducted in the block in the year of actual payament section 43A

As per AS 11 the liability expressed in foreign currency at the close of the year has to be increasec/decreased based on the rates prevailing at the close of the year when corresponding increase decrease has to be affected in value of assets the amendment of section 43A provides for increase decrease in currency fluctuation at the time of payament.This will have a major implication for increase/decrease in foreign currency liability as though value of assets for the same has to be increased/decreased in books of accounts but the same would not be eligible for depriciation under income tax computation

AGREED WITH DEEPAK SIR