30 June 2010
In case of recognising deffered tax for EOU's availing tax holiday under 10 B of Income Tax Act,the differences are supposed to be reversed within the holiday period are not to be recognised, but differences to be reversed after holiday period to be recognised. Thus in case of temporary differences caused by depreciation, how can we determine it is after or before holiday period since we cannot forecast the depreciation after 15 years (holiday period)??
30 June 2010
The accounting standard itself consist of an example at the end to expalin deferred tax asset in case of tax holiday.
In my view Since the tax holiday is a very long period deferred tax must not be recognised in this case and a suitable note for the same should be included in the notes to accounts for the same like since the company is currently in the tax holiday period and hence no deferred tax has been recognised in the books.
CAclubindia
