Provision for inventories
This query is : Resolved
20 March 2011
Are provision made for inventories an a allowable expenditure under income tax?
20 March 2011
Clarify the type of Provision on Inventories you are asking about?
20 March 2011
It is allowable expenditure.
20 March 2011
according to me in income tax, provision not allowable as expenditure. real/actual expenditure will allowable.
20 March 2011
Even i came across many computations where these are disallowed .
Can u tell me under which section it is disallowed or the section where it is said that only real/actual expenditure is allowable...
& In that case all other provision for expenses that we make should also be disallowed.
Can u tell me under which section it is disallowed or the section where it is said that only real/actual expenditure is allowable...
& In that case all other provision for expenses that we make should also be disallowed.
22 March 2011
Hi,
No Provisions will be allowed under the Income Tax Act 1961.
W.R.T your second issue about a particular Section which say thats " Provisions are not Allowed".........
Rather than understanding that way, i believe we should see it as follows
" Since there is no Section which specifically allows Provision on Inventory (whether made for obsolete inventories or real/actual expenditure), therefore there cannot be any claim for Provision "
Unlike " Provision for Bad & doubtfull debts " which is allowed for Banks and Financial Institutions which is specifically given under
Section 36(1)(viia).
Hope i have clarified your Doubt
Thank you,
Regards
CA. Lohith. J
B.Com,ACA,CS,(ICWA),SAPM Hons,ITF Hons
No Provisions will be allowed under the Income Tax Act 1961.
W.R.T your second issue about a particular Section which say thats " Provisions are not Allowed".........
Rather than understanding that way, i believe we should see it as follows
" Since there is no Section which specifically allows Provision on Inventory (whether made for obsolete inventories or real/actual expenditure), therefore there cannot be any claim for Provision "
Unlike " Provision for Bad & doubtfull debts " which is allowed for Banks and Financial Institutions which is specifically given under
Section 36(1)(viia).
Hope i have clarified your Doubt
Thank you,
Regards
CA. Lohith. J
B.Com,ACA,CS,(ICWA),SAPM Hons,ITF Hons
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