As 22 - taxes on income
This query is : Resolved
28 October 2012
Please clarify this..
If There is loss as per Accounting Rs.(20,000) and loss as per Income Tax Rs.(30,000), then
What should be created?
Deferred Tax Asset on timing difference:-
(30)-(20)=+10
OR
Deferred Tax Liability on timing difference:-
(20)-(30)=-10
NOTE:- It is on account of temporary timing difference
If There is loss as per Accounting Rs.(20,000) and loss as per Income Tax Rs.(30,000), then
What should be created?
Deferred Tax Asset on timing difference:-
(30)-(20)=+10
OR
Deferred Tax Liability on timing difference:-
(20)-(30)=-10
NOTE:- It is on account of temporary timing difference
28 October 2012
In both the cases the tax liability is Zero. You have not gained anything and therefore no deferred tax assets or deferred tax liability is required to be created. If you gain something then this is deferred tax Assets
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28 October 2012
But, as per the ICAI, CA FINAL STUDY MATERIAL, Illustration No.4 page 205, it says there is a business loss of Rs.2,00,000 for year ending 31.03.2010, and there is no difference between taxable income and accounting income except that the carry forward loss is allowed in the subsequent years 2011 and 2012.
Accordingly, tax effect on timing differences originating in 2010 is accounted as DTA on 2Lakh*40%=Rs.80000
Hence, i'd be glad if some more light could be shown on my previous query
Please refer page 205 on this link http://220.227.161.86/19324sm_finalnew_cp1b.pdf
Accordingly, tax effect on timing differences originating in 2010 is accounted as DTA on 2Lakh*40%=Rs.80000
Hence, i'd be glad if some more light could be shown on my previous query
Please refer page 205 on this link http://220.227.161.86/19324sm_finalnew_cp1b.pdf
28 October 2012
http://220.227.161.86/19324sm_finalnew_cp1b.pdf
30 October 2012
In this case it appears that an excess deduction has been allowed of rs 10000/- under income tax thats why the loss is higher. Accordingly DTL of Rs 10000 X tax rate to be created.
Further as loss of rs 30,000/- can be carried forward for set off, accordingly if virtual certainty is there then DTA on same can be created as if would reduce future tax incidence.
Further as loss of rs 30,000/- can be carried forward for set off, accordingly if virtual certainty is there then DTA on same can be created as if would reduce future tax incidence.
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31 October 2012
Thankyou..
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