No provision for income tax in audited balance sheet

Save Share

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2011 I am working in propritership firm. Our CA send us last year audited balance sheet.But in that there is no provision for income tax. Current year we paid self assesment tax after deducting Advance Tax. so what entry should we do?
If propritor has another firm, than how to divide taxable income and income tax deduction?

Krishna Mohan

Krishna Mohan (Expert)

28 December 2011 Provision for IT is compulsory as it is a business expenditure. Merely it is not allowed, should not make the provision not necessary. In your case, as there is no provision, you may pass entry as IT paid. Anyway, this does not effect your tax liability.
For your second question, proprietor has to pay tax on the profits of all the businesses. If you want to divide the same for MIS purpose, you can do it based on proportion of total tax to the individual profit of the unit.

Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2011 Our propritor have two firm and investment in both firm above one lac. so which firms investment will be consider for deduction u/s 80c.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

28 December 2011 Income tax is not levied on the left or right hand of the proprietor. It is levied on the whole body. Tax is payable on Income of all businesses of a proprietor.
.
Dividing tax liability in the ratio of profit earned from the 2 firms is sufficient. Tax is calculated after considering the deductions also. So, again you need not to do such an exercise for the so called MIS.
.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now