ACIT v. Rajratna Metal Industries Ltd.|Foreign exchange fluctuation gain or loss to be included for arm’s length pricing|

(Aug3, 2017)

The Ahmedabad Bench of the Income-tax Appellate Tribunal issued a decision finding, in part, that foreign exchange fluctuation gain or loss was an operating item, and was not to be excluded under the arm’s length price standard.

The taxpayer asserted that foreign exchange fluctuation gain or loss must be treated as operating in nature for the purpose of computing the arm’s length price. The tax department disagreed and proposed a transfer pricing adjustment.

The Tribunal upheld the decision of CIT(A) in treating foreign exchange income/(loss) as an operating item to be included for the purpose of computing ALP as the Income tax department could not present a rebuttal to the judicial pronouncements relied upon by the taxpayer.

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