Sir/Madam,
My question is as follows:-
In past few tears company incurred huge losses. But this year it has a profits, as a result of which current tax is "0" but it has a liability of MAT and there will be defferred tax because previous year losses are being adjusting in this year. Our company is a company incorporated u/s 8 of the companies act. One of our group company has been raided by CBI and our company's name is also in FIR hence we will not be allowed any income tax or FCRA facility.
Kindly advise should we show provision for MAT or Defferred Tax in the financial statements.
If your company is under scrutiny by tax authorities, then is your business still a going concern? If it is halted, then realise profit or loss. If your still operating, one cannot create a provision IAS 37 and IndAS 37 for income taxes as this has a different treatment for provisioning. Taxes are recognised as a liability and creating new provisions will overstate the balance sheet. So, give it a normal treatment in the future.
CAclubindia
