Excess provision written back S/ 41 of Income tax

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This query is : Resolved

Mehul (Querist)

24 March 2009 We are STPI company and claimed 10A benefit in last year.

There are some expenses claimed in last year & reversed in current year. Auditor has asked to reverse it as Other Income. Our problem is if we show as other income then we can't include in business income to claim 10A deduction becuase, in general, other income used to take out from business income and offered to tax under other sources head.

for us tt is better to not to claim provisional expenses so income get increase and claim 10A benefit rather pay 30% on reversal of expenses which were actually not paid by the company.

What should be the remedy,can Co. claim 10A benefit on reversal of expenses i.e. show that exps reversal in business income? Any supporting case law is available to satifsy audior?

Please help.

Regards,
Mehul Dedhia
mehulddedhia2002@yahoo.com

C.A.Javid Patel

C.A.Javid Patel (Expert)

24 March 2009 If we strictly go as per the Section 41(1) the reversal of expenses is Deemed income under section 41 but it is chargeable as "Profit & Gain of Business & Profession". and as your business is exempt under section 10A there is no tax liability will arise in your case.

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Mehul

Mehul (Querist)

25 March 2009 Is any supporting document available to show it to Auditor.

Mehul

Mehul (Querist)

25 March 2009 Is any supporting document available to show it to Auditor.