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Deferred Tax Liability - Special Reserve u/s 36(1)(viii)

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Querist : Anonymous

Querist : Anonymous (Querist)

02 May 2011 Special Reserve is to be created u/s 36(1)(viii)appropriating profits @20% of eligible business.

whether in calculation of Deferred Tax Liability Special reserve is to be added back for computation.

If yes, then what is specific reason for adding Special Reserve for computation of Deffered Tax Liability

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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03 May 2011 The specific reason for any adjustment like these is,
the specific manner in which
PROFIT DERIVED from the eligible business has to be computed.

PROFIT DERIVED to be computed under the head "Profits and Gains of Business or Profession".
Under this head Business Profit means Net Profit after making such adjustments as prescribed -considering items allowable and dis-allowable.

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