ABC LTD havig book loss of Rs.20L AND Income tax loss of Rs.30L for the financial year 2008. ABC LTD also have deferred tax liability of Rs. 4L OF earlier years.
Depreciation As Per Co. Act Rs.5L and As Per IT Act Rs.8L.
Is AS-22 applicable? If yes, what is amount of deferred tax?
DTA of Rs (30*33.99%)10.197 lakh would be made assuming future profits are virtually certain with documentry evidenceof AS-22
On dep. DTL of Rs 1.0197 (8-5)*33.99% would be created
So in P& l Rs 9.1773 would be credited
and in BS Rs 4.1773 would be shown as DTA
The above is sincere attempt Please revert back with suggesstion if any.
Hi,
Since depreciation as per IT is more, it will be DEFERRED TAX LIABILITY and not deferred tax asset. Hence, provision will be the otherway round.
Rgds/Dharmaraju
As given in the present case, the Company is carrying Deferred Tax Liability of Rs.4 Lakhs. In addition to that, in the current year also the Company is incurring losses. So it needs to be checked that whether the Company is intending to discontinue any of its current operations and in such a case, the company need not create any more Deferred Tax Liability if the virtual certainity of future profits is not expected. Deferred Tax Liability should be created only when in the future it is expected that such a liability is capable of reversal.
CAclubindia
