AS-22 Taxes on Income

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GANESH DURAI IYER (Querist)

29 October 2008 Sir, I have a query. Please help

There are 3 Balance Sheet Items:

As per Books As per tax basis

Equipment 2 Lacs 1.20 Lacs

Prepaid
Insurance 75,000 NIL

Warrant
Liability 50,000 NIL

Kindly help me to calculate the DTA / DTL?
The tax rate is 40%.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

30 October 2008 1) How can there be a difference in equipment cost?
2)Treatment for Prepaid insurance and warranty as per books and IT will be same

CA Bosu babu

CA Bosu babu (Expert)

31 October 2008 Prepaid and warrant liability are in the nature of Asset & liability respectively. which will not route through P&L account whether in this yr or in the next year(No timing or permanent diffe). so those two will not attract for DTA /DTL.

The only item which attracts DT is Depreciation. i wil explain wit this example....
Cal'n of DTA/DTL:

Net profit as per P&L (say) 100,000.00
Add:
Depn on equipements as per Cos act(say 13.61% on open WDV 2Lacs) 27,220.00

Less:
Depn on Equipent as per IT on Open WDV of Rs.1.2 lacs @ 15% 18,000.00

Net Profit for DTL caln 109,220.00

IT payable as per Cos act(100000*33.99/100) 33,990.00

IT payable as per IT act(109220*33.99/100) 37,123.88

DTA (IT as per IT act - IT as per Cos act) 3,133.88

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

31 October 2008 But the queriest says equipment cost being different!

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