i) When foreign exchange differences are realized.

ii) Whether foreign exchange losses arising on conversion of debt to
equity is-an allowable expense.

Following an audit on the Appellant for the years of 2009-2011, the Respondent raised an additional income tax assessment, disallowing foreign exchange loss adjustments and confirmed the assessments on 16/09/2013. This assessment affected the loss carried forward for the years of 2010 and 2011 respectively.

The appellant appealed the assessment and prays that the tribunal accepts the appeal with costs.

i) The Appeal partially succeeds and that the Losses in respect of offsetting of receivables amounting to USD 31,891 against the foreign loan is allowed.

ii) The Appellant is not entitled to deduct the loss incurred through portion of loan extinguished through conversion of debt to equity and therefore currency conversion losses in respect of the balance of USD 28,255,616 and GBP 1,464, 272 be disallowed.

iii) The confirmed assessments for the years 2009 to 2011 the subject matter of this Appeal be and are hereby expunged and the Respondent is hereby directed to issue to the Appellant a fresh assessment.