11 May 2010
The company has sold all of its assets during the year and written down value as per companies act came to nil. Should we create deferred tax assets/liabilities? If yes how we will calculate the written down value as per income tax act. Pls advise.
15 May 2010
Differed tax asset or liability is created on on the diffrence of depreciation as per companies act and incometax act. you shoild calculate the depreciation on the written down value of the current year opening balalnce and the no of days used as per comnpanies act. but incase of income tax depreciation is calculated on the value of asset lying on the year end, here there is no fixed asset on the end of the year so there is no case of depreciation as per income tax act. but your books shows the depreciation as per companies act.and ur profit also reduced to the extent of that portion. but as per income tax act that depreciation will not allowed and ur tax liability also increased to the extent of that portion. so u have to provide doffered tax asset to the extent of depreciation calculated as per companies act.,,,
CAclubindia
