MTM loss on forward contract as on balance sheet date not deductible as business loss

Bechtel India Pvt. Ltd. Vs ACIT (ITAT Delhi)

Hedging forward contracts of foreign currency cannot be marked to market (MTM) on balance sheet date as already there is a underlying asset and there is no extra outgo for settlement of the forward contract other than already determined in the contract and thus there is no additional liability or benefit to the assessee on the settlement date. Once there is no liability or benefit on the settlement date, there is no possibility of liability or benefit to the assessee on balance sheet date also.

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