Rupee appreciation has cheered many a big corporates that had huge forex loans. But CFOs and auditors are jammed over its presentation to the taxman.
That is, the forex gain has two accounting options.
The gain can be (a) credited to the Profit & Loss Account or (b) represented in the Balance Sheet by crediting the gain to Fixed Asset account (reducing the cost of the asset).
Most big companies are unwilling to take the forex gains to P&L account. The forex gain, as income would increase their Minimum Alternate Tax (MAT) ) liability, which is often kept pushed to the floor. There is some confusion over prescriptions in Accounting Standards (AS-11 by ICAI) and what the law provides (Sch.VI of The Companies Act, 1956)
A windfall doesn't always mean all round cheer, right...?