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Tax Publishers
Revision under section 263 based on cash flow
hedge accounting
Facts:
Assessee
was a BPO entity who had done cash flow hedge on which they had followed AS-30
as per which the effective hedge component was showed as Hedge receivable and
an equivalent amount was shown on liability side of the Balance sheet as
reserves and surplus. This was questioned by PCIT under section 263 in his
revision powers and remitted to the AO on grounds that a proper enquiry
was not done on the cash flow hedge and the direct accounting into
reserves and surplus instead of routing it via P&L account.
Aggrieved by this assessee went in appeal -
Held
against the assessee that the accounting aspect of cash flow hedge was not
properly investigated by the AO and thus the PCIT's revision was correct.
Ed. Note:
The dichotomy between tax accounting and standard based accounting is
imminent with a timing issue and a deferred tax impact as well is quite likely
in such hedge accounting cases.
Case: AGS Health (P) Ltd. v. Asstt. CIT 2023 TaxPub(DT) 2476 (Chen-Trib)
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