Clarification Regarding Deferred Tax Asset/Liability

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CA. Naveen Jain (Querist)
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20 July 2011 Pls clarify two Points regarding DTA/DTL

1. A newly formed company in its first year financial has no sale/income, then DTA/DTL will applicable.

2. If a company has net loss then DTA/DTL will applicable

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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20 July 2011 1. Since there is no business loss as per IT Act,1961 no need to book DTA. However,if there is depreciation allowance,to that extent DTA/DTL has to be recognized.
2. If company is 'virtually certain' that sufficient profit will arise in the coming year, DTA/DTL should be booked, otherwise no need.

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