Deferred tax

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nitin rajiv rane (Querist)
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04 July 2013 I have encountered a situation for which i require solution in respect of Deferred Tax.

For eg facts of the case are as follows :

Suppose the data given below is for FY 12-13 :

Particulars- Accounts
Loss Rs.(250,000)
Less: Depreciation as per Companies Act Rs. 170,000

Net Loss Rs.(420,000)

Particulars- I T
Loss Rs.(420,000)
Less: Depreciation as per I. Tax Act Rs. 90,000
Less: Preliminary Exp U/s 35D of I. Tax Act Rs. 10,000
Add: Depreciation as per Companies Act Rs. 170,000
Net Loss Rs.(350,000)

For the situation given above,

1)Do we have to calculate deferred tax on only UNABSORBED BUSINESS LOSS,

or

2)Deferred Tax is calculated on all the following items :
a)Depreciation
b)Preliminary Exp U/s 35D
c)Unabsorbed Business Loss

Which of th above option should be considered for deferred tax calculation

Yours early reply will be highly appreciated.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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04 July 2013 1) DTA on account of depreciation difference has to be necessarily booked.

2) DTA on business loss should be booked only if there is "virtual certainty" that sufficient profit will be emerged in next year.

nitin rajiv rane

nitin rajiv rane (Querist)
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04 July 2013 Thx Mr Warrier, I appreciate your quick response to the query.

So u want to say that i should exercise the second option and calculate deferred tax by considering the following :
1)Depreciation Difference
2)Preliminary exp as per Sec.35D of Income Tax Act
3)Unabsorbed Business Loss

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