The Hindu Business Line : Exchange rate fluctuation

Our company took loan from foreign companies for meeting its working capital requirements. There is an exchange difference (loss) due to fluctuation in rate of exchange resulting in additional liability of Rs 30 lakh for the year ended March 31, 2008.

We claimed the exchange loss which the assessing officer (AO) disallowed stating that such loss could be allowed only on actual repayment as per Section 43A. Is he correct?

Revision under Section 263 in respect of matters considered in appeal: Our firm claimed deduction under Section 80-IB and also set-off of brought forward business loss of the preceding years. The AO disallowed both the claims and the first appellate authority viz., Commissioner (Appeals) allowed our claim made under Section 80-IB and he however rejected the claim as regards set-off of brought forward losses.

Both the Revenue and the firm are in appeal before the tribunal. Now the Commissioner wants to assume jurisdiction under Section 263 for disallowing the deduction under Section 80-IB. Is not the doctrine of merger applicable in order to estop the Commissioner from invoking Section 263 in respect of matters considered by Commissioner (Appeals)?

Liaison office solely meant for purchase of goods: Our company in the UK has opened a liaison office in India for purchase of goods in India and for exporting the same to our branches in various countries in the Asia- Pacific region.

We have made payments to suppliers directly from our head-office in the UK. Since the liaison office is established only for purchase of goods on our behalf, we claim that no income had accrued from the activities of the liaison office in view of clause (b) of Explanation 1 to Section 9(1)(i). Are we correct in our interpretation?

Tax deduction in respect of concessional air tickets purchased and sold by travel agents: We are travel agents for various leading air carriers. We purchased and sold concessional air tickets of carriers.

Is the transaction of purchase and sale of air tickets liable for tax deduction under Section 194H? In respect of regular booking of air tickets as agent, tax was deducted at source out of commission under Section 194H by the companies.

In addition to regular commission, we at times retain supplementary commission (more than regular commission) out of the monies collected from the customers. Is this supplementary commission liable for tax deduction under Section 194H?

(PracticeProblems.blogspot.com)