Can any1 illustrate how unabsorbed depriciation and business loses leads to creation of deffered tax asset??
Sneha dagli (étudiante) (197 Points)
26 July 2012Can any1 illustrate how unabsorbed depriciation and business loses leads to creation of deffered tax asset??
Shenba Associates
(Partner)
(115 Points)
Replied 26 July 2012
Deferred Tax arose only for timing difference of Company books and Income Tax. Since it is the loss which can be set off future year. Moreover, the loss not affect your tax liabilities. Be clear what is deferred tax and when it will be affected or arised in your books.
Regards
Mari sankar C
CA K. PAPNEJA SFM and FR FAC'LTY
(NA)
(133 Points)
Replied 01 August 2012
when u carry forward unabsorbed depreciation /losses these wud be set off against future taxable income resulting in lower taxable income and lower tax in future.According to accrual concept on which AS--22 is based since saving of tax in future willl be due to loss of current year , hence should be recognised as DTA in current year.
BABU
(Article assistant)
(37 Points)
Replied 18 September 2012
Thank you sir,
But how to calculate DTA for newly incorporated company having losses.
CA K. PAPNEJA SFM and FR FAC'LTY
(NA)
(133 Points)
Replied 18 September 2012
A newly incorporated company will have to estimate whether it wud have sufficient taxable profits against which the unabsorbed depreciation /Losses can be set off . For ur reference i quote relevant PARA of AS -22
2. When there are unabsorbed depreciation or losses: |
vide Para 17, Where an enterprise has unabsorbed depreciation or carry forward of losses under tax laws, deferred tax assets should be recognised only to the extent that there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized
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