Deferred TAx Assets/Liabilities

Deferred tax should be understood in relation to matching concept which is a generally accepted accounting practice, Matching concept primarily means that revenues of a year should be paired with expenses of that year. Tax is also one such genuine business expenditure but the expenses considered for tax purposes are different from Shedule VI requirment of companies act i.e effectively the tax you compute is not the tax for the revenues and expenses you show in your P&L and BS. One classic example is the Depreciation element in the P&L account which is as per co's act.  To the extent of the difference in WDV as per cos act vs IT act there will be a timing difference of tax incidence which is bridged by deferred tax provisioning.