Can a company claim income tax paid in its profit & loss account,, if provision created for income tax is less than income tax paid. and if not then what will be the treatment of income tax paid, I.e what will be its adjustment.
INCOME TAX PAID CAN ONLY BE CLAIMED WHILE FILING RETURNS. PROVISION CREATED IS LESS THAN INCOME TAX PAID . CREATE PROVISON. INCOME TAX DR. PROVISION FOR INCOME TAX PAID CR. PROV FOR INCOME TAX DR. TO PROFIT AND LOSS ACCOUNT. IF EXCESS PROVISION MADE . PAYMENT INCOME TAX DR. CR. BANK. WHILE PAYING INCOME TAX ISSUE CHQ IN FAVOUR OF CBDT TAXES. REVERSE TO BE MADE TO THE EXTENT OF PROVISION.
Income tax is not an allowable expenditure hence while preparing cash flow frm operating activities we deduct an amount frm cash flow from operating activities but its absoloutely an appropriation of profit .
CAclubindia
