Case Law Details
Case Name : CIT Vs. Industrial Finance Corporation of India (Delhi High Court)
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All High Courts Delhi High Court
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The Delhi High Court (HC) [2010-TIOL42-HC-DEL-IT] in the case of CIT Vs Industrial Finance Corporation of India (Taxpayer) which held that the difference between forward rate and exchange rate prevailing on the date of entering into forward contracts is fully allowable as deduction even if the difference is amortised in the books of account over the life of the forward contracts.
Background and facts of the case
- The Taxpayer, a financial corporation, is engaged in the business of making loans and advances to various industrial concerns. The Taxpayer raises foreign currency borrowings for the purpose of meeting lending requirements. In order to safeguard loss on account of foreign exchange fluctuation, the Taxpayer enters into forward contracts with banks for the purchase of foreign currency.
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