DISALLOWANCE U/S 43B & 40a OF INCOME TAX OF CURRENT YEAR WILL BE TREATED AS DTA & SAME IS BEEN CONSIDERED FOR CALCULATING DTA/DTL. SIMILARLY WHETHER DISALLOWANCE OF PREVIOUS YEAR ALLOWED DURING THE YEAR U/S 43B & 40a IS TO BE CONSIDERED FOR CALCULATING DTA/DTL? IF WE DONT TAKE PREV YEAR DISALLOWANCE, THEN HOW DTA WILL GET NULLIFIED IN SUBSEQUENT PERIOD RELATINNG TO SAME COMPONENT? SINCE DTA/DTL ARISES ONLY FOR TEMPORARY DIFFERENCE & IT SHOULD BECOME NULLIFIED SUBSEQUENTLY..
19 October 2007
YES.DISALLOWANCES OF PREVIOUS YEAR ALLOWED DURING THE YEAR TO BE CONSIDERED FOR DTA/DTL.OTHERWISE THESE GET CARRIED WITHOUT ANY REAL MEANING.THESE ARE TEMPORARY DIFFERENCES ON ACCOUNT OF TIME PASSAGE AND DIFF. BETWEEN ACCOUNTIN G IN CO'S ACT AND IT ACT. I EVEN CAME ACROSS CASES WHERE THE AUDITOR SAYS THE LOSS INCURRED IS A DTA AS THE SAME HAS SAVED THE COMPANY FROM TAXES. BUT THIS IS CARRYING A CASE TO TOO MUCH OF ILLOGIC.THERE IS NO CERTAINITY IN FURURE WHETHER THE ENTIYTY WILL BE IN LOSSES OR PROFITS IN FUTURE.IF IN PROFITS ,IT MAY SET OFF LOSSES.OTHERWISE HOW LONG DO WE CARRY THIS LOGIC? I WISH ICAI OR INCOME TAX DEPT. TO COME OUT WITH SOME REALISTIC GUIDANCE ON THESE ISSUES, AS PEOPLE HAVE ALRAEDY STARTED FILING CASES ON THESE ISSUES. AS THESE ARE BELOW THE LINE ADJUST -MENTS,ONLY THE B/S WILL IS SOMEWHAT HAZY AND UNREALISTIC.P&L NOT AFFECTED. R.V.RAO
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