Deferred tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

25 June 2012 A Pvt ltd co has no business from last 3 years and showing depreciation & audit fees provision as expense in P&L a/c.

My question is whether provision for deferred tax shall be made or not.(for depreciation part- diff in dep as per income tax and dep as per companies a/c)

Computer is the only assets in Fixed assets.
In last year balance sheet the provision was made by the co and same was audited by the previous auditor without any comments/ remarks on deferred tax.

reply soon as we have to prepare balance
sheet as per revised schedule.

CA Chitta Ranjan Das

CA Chitta Ranjan Das (Expert)
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25 June 2012 If you want to make adjustment regarding Deffered Tax liability in the books of accounts unlike previous years there is no restrictions as such. Eventhough computer is only one asset in the fixed asset class, adjustment for timing differences w.r.t. depreciation can be made in Accounts.
But deffered tax assets can only be recognised and carried forward only to the extent it is reasonably certain that there will be sufficient future income to recover such asset. As stated in question, the entity has no business for last three years. So in this context, creation of DTA should be carefully made after considering sufficient income will be available in future to recover such asset.
Notes will be given in accounts accordingly.

Querist : Anonymous

Querist : Anonymous (Querist)

20 July 2012 dear expert,
thanks for your comment. pls suggest me:

In last year DTA is appearing in balance sheet (excess of dep as per companies act over dep as per income tax act)
this year dep as per income tax is more than dep as per companies act.
pls guide whether we should create DTL provisions and reduce the amount from DTA (opening).
or nothing to be done and take the previous year figures DTA as it is.
or opening DTA to be completely adjusted.

pls suggest with notes on deferred tax (to be given in auditors report)

CA Chitta Ranjan Das

CA Chitta Ranjan Das (Expert)
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28 October 2015 Last year DTA can be adjusted against current year DTL and the net effect whether asset or liability will be shown in the balance sheet.

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