Fact of the Case:
1. Entry passed for Income Tax Provision done in 2008-09 for Rs. 200000/-
Income Tax A/C Dr. 200000/-
To Provision for Income Tax Cr. 200000/-
2. Actual Liability arise for Rs. 175000/-, Entry passed in 2009-10
Provision for Income Tax Dr. 175000/-
To Bank Cr. 175000/-
Balance Rs. 25000/- is still standing in Books.
How should i clear the provision amount :-
1. Adjust the amount against Capital account? or
2. Showing it as Prior period item as Income and clear provision amount? or
3. Any other impact can be given? please let me know.