Student
113 Points
Joined December 2008
Discussed with my colleagues. Presented below is our view:
1. Since the basis of accounting is cash, your view on the above circumstance is correct. The income that you get, Rs. 70 Lacs shall be taxed as firms income. Against it shall be deducted, the expenses you incur @ 2.75 Lacs p.m. For the period ending June 2010, your total income shall stand at 61.75 and you shall have to pay tax on such amount. For the period July-March, the accounts shall show a loss of 24.75 Lacs and therefore, liability shall be nil. In effect, the losses (cumulative), shall be allowed to be carried forward as per relevant provisions of the Act.
2. Had the basis of accounting been mercantile, the amount of 70 Lacs shall be bifurcated and spread over equally each month. This shall be beneficial in the present case as firms attract a tax slab of 30% succeeded by Cess.