QUESTION :
|
Liabilities |
Amount (31.03.2008) |
Amount (31.03.2009) |
Assets |
Amount (31.03.2008) |
Amount (31.03.2009) |
|
|
|
|
|
|
|
|
Provision of Tax |
70,000 |
1,00,000 |
Advance Tax Payment |
80,000 |
1,05,000 |
|
|
|
|
|
|
|
Additional Information :
i) During the year, income tax for the year 2007-08 was assessed at Rs. 76,000. A cheque of Rs. 4000 was received along with the assessment order towards refund of income tax paid in excess, by way of advance tax in earlier years.
SOLUTION :
Sources of fund :
- Refund of Income tax : 4,000
Application of Fund :
- Payment of tax : 1,05,000
PROVISION FOR TAXATION A/C
|
Particulars |
Rs. |
Particulars |
Rs. |
|
To Advance tax payment A/c |
76,000
|
By Balance b/d |
70,000
|
|
To Balance c/d |
1,00,000 |
By P/L A/c (additional provision for 2007-08)
|
6000
|
|
|
|
By P/L A/c (provision for 2008-09)
|
1,00,000 |
|
|
1,76,000 |
|
1,76,000 |
I have doubt only in red indicated figure.
Why are we creating provision again for 2007-08 in current year, while the same has already been paid during previous year as Advance tax. ? Please help
CAclubindia
