AS 22 and ASI 3

dear sandeep

as per ASI we need not to recognize any deferred tax which would be reversed during the tax holiday period.

IN your case the deferred tax arising on 31.03.2010 and expected to be reversed during 100% tax holiday period need not to recognized at all

AND deferred tax which are expected to be reversed during 30% exemption period you need to recognize only 70% of deferred tax

can be under stood as suppose you are having a liability of Rs. 100L on account of deferred tax which would be reversed in the said five years of 30% exemption than you should recognize liability of Rs. 70L only

can verified as under

Year                 Reversed amount                 Reversal due to exemption

1                                    20L                                 14L

2                                    20L                                 14L

3                                    20L                                 14L

4                                    20L                                 14L

5                                    20L                                 14L

Total Reversal  (14L*5) =   70

thanks sh*tanshu 4 ur valuable inputs

Also i would like to ask , if  as in my case if there will be no reversal in the upcoming future years in the tax holiday period. The deferred tax liablity will only be created in the upcoming 12 years then

if there will any treatment i needed to be done in the books of accounts as on 31.03.2010

Regards

Sandeep

Dear Sandeep

I didn't get your query

In your case there are following possibilities

1. If deferred tax is reversed after tax holiday period: In this case you need to recognized DTL and if you have DTA you need to examine that whether there is reasonable certainty to sufficient future profit for reversal of DTA

2. If deferred tax is reversed in tax holiday period:  In this case if reversal is within 100% tax holiday period than no deferred tax will be recognized and if reversal is within 30% tax holiday period then 70% will be recognized.

Dear Sir, If i have a asset group that reverses during the tax holiday period i need not create DTL But what in case of additions to asset which extends beyond the holiday period?? Should i consider additions & create DTL??