30 August 2010
Dear Experts, Requires urgent attention sir!!! In case of Level II firms also AS-22 (Accounting for Income Taxes apply). After analysing the Profit & Loss Account, the reasons for the difference in the book profit and tax profit i am able to arrive. Every thing is going to be permanent difference except Section 43B. That is the only expense which is capable of reversal due to time(i.e. Temporary Difference). So 1)since the difference in book profit and tax profit is due to an expense, should i have to create Deferred Tax Asset? 2) In case of Deferred Tax Asset has to be created should i have to pass the entry in tally as Deferred Tax Asset A/c Dr. To P&L Account Is the above entry correct? 3) By passing this entry alone will i be able to give doubt effect one showing it as an income in the p&L account and the other one showing it as an asset in the balance sheet...Does this amount to following normally accepted accounting principle? 4)If i pass the above entry then while computing Total Income statement as per Income Tax Act, can i deduct the Deferred Tax debited in the P&L account? Thanks for the every one who has read this and also replied. With regards, Rajesh.
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