(i) How should the exchange difference as on 31st March 2025 be treated under ICDS VI and Section 43A of the Income-tax Act, 1961 for TECH M? (ii)…

(i) As per ICDS VI, Fixed assets are non-monetary items. A foreign currency transaction shall be recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction. At last day of each previous year, non-monetary items in a foreign currency shall be converted into reporting currency by using the exchange rate at the date of the transaction. In respect of non-monetary items, exchange differences arising on conversion thereof at the last day of the previous year shall not be recognised as income or as expense in that previous year. As per section 43A, increase or decrease in the liability (expressed in Indian rupees) of the assessee at the time of making the payment would be adjusted in the actual cost. TECH M was purchased on 1.9.2024 and the payment is to be made in September 2026. Accordingly, there would be no treatment of the exchange difference as on 31.3.2025 either under ICDS VI or section 43A for TECH M. (ii) The actual cost of TECH M on 31.3.2025 would be EUR 5,00,000 × ₹ 88 = 4,40,00,000 (iii) Depreciation for F.Y. 2024-25 Normal depreciation = 4.40 crore × 15% × 50% since the equipment was put to use for less than 180 days = 33,00,000 Additional depreciation = 4.40 crore × 20% × 50% since the equipment was put to use for less than 180 days = 44,00,000