Accounting treatment for insurance compensation received
This query is : Resolved
01 January 2014
Dear CA friends please suggest regarding following concepts.
A firm got business loss by cyclone in a year. It got insurance compensation in next year. The firm wants to take insurance compensation for taxation in the received year based on the case of Commissioner Of Income-Tax, ... vs M/S. Moon Mills Ltd on 26 October, 1965 in supreme court. But the auditor says if compensation is taken for tax computation in the received year instead of loss occurring year he can make note in report as this case was related to the A.Y 1949-1950. The note may cause to unnecessary department controversial. Please suggest that whether auditor view is correct.
A firm got business loss by cyclone in a year. It got insurance compensation in next year. The firm wants to take insurance compensation for taxation in the received year based on the case of Commissioner Of Income-Tax, ... vs M/S. Moon Mills Ltd on 26 October, 1965 in supreme court. But the auditor says if compensation is taken for tax computation in the received year instead of loss occurring year he can make note in report as this case was related to the A.Y 1949-1950. The note may cause to unnecessary department controversial. Please suggest that whether auditor view is correct.
05 January 2014
Auditor has to make note about this in his report as to give clarity to its end users.
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