Provision for inventories

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Sajini

Sajini (Querist)
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20 March 2011 Are provision made for inventories an a allowable expenditure under income tax?

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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20 March 2011 Clarify the type of Provision on Inventories you are asking about?

Sajini

Sajini (Querist)
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20 March 2011 provision made for obsolete inventories

CA. RAVIKUMAR

CA. RAVIKUMAR (Expert)
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20 March 2011 It is allowable expenditure.

CA Ravi Sisodia

CA Ravi Sisodia (Expert)
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20 March 2011 according to me in income tax, provision not allowable as expenditure. real/actual expenditure will allowable.

Sajini

Sajini (Querist)
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20 March 2011 Even i came across many computations where these are disallowed .

Can u tell me under which section it is disallowed or the section where it is said that only real/actual expenditure is allowable...

& In that case all other provision for expenses that we make should also be disallowed.

CA. Lohith Jagadeesh

CA. Lohith Jagadeesh (Expert)
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22 March 2011 Hi,

No Provisions will be allowed under the Income Tax Act 1961.

W.R.T your second issue about a particular Section which say thats " Provisions are not Allowed".........

Rather than understanding that way, i believe we should see it as follows

" Since there is no Section which specifically allows Provision on Inventory (whether made for obsolete inventories or real/actual expenditure), therefore there cannot be any claim for Provision "

Unlike " Provision for Bad & doubtfull debts " which is allowed for Banks and Financial Institutions which is specifically given under
Section 36(1)(viia).

Hope i have clarified your Doubt

Thank you,

Regards
CA. Lohith. J
B.Com,ACA,CS,(ICWA),SAPM Hons,ITF Hons

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