As 22 help

Final 1095 views 2 replies

CMA.Manikanta

Grad-CMA &CA-Final

314 Points Joined October 2009

as 22query... senior students and experts please comment.

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before reading question my doubt is regarding un amortised preliminary expenses which must be taken as reversal of dta .

rules in as 22 is dta can be adjusted with dtl

but how dta reversal can be adjusted with dtl ????

(or)

am i taking wrong view of unamortised preliminary expenses given below as dta reversal ?
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question :
1)## unamortised preliminary expenses as per income tax records :30 thousand
2)depreciation as per accounting records: 2 lakhs
3)depreciation as per tax laws : 5lakhs

Taxrate :50percent

create dta or dtl !!
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Ans
:

dtl = 5 lakh - 2 lakh *50 % =)1500000
less dta 30thousand*50% (15000)
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135000 dtl
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Plz give ur views??

Replies (2)

CA Saroj Kumar

Keen to learn something new every moment

2588 Points Joined June 2010

Timming difference during the year is of Rs. 300000 on which DTL would be @ 50 % i.e= 150000

and on the unamortised value of Preliminary expenses ,,,The amount is relevant is what amout is going to be amortised during the year. i.e 1/5 of total amount. i suposed it as- 30000*5/4*1/5=7500(i assumed that one year has eplapsed for preliminary exp) this amount will create a timing diffrence for this year on which DTA will arise i.e. eual to = 7500*50/100= 3750 which is required to be adjusted / reversal during the year.

The final DTL balance will be= 150000-3750= 146250

Previuosly i was taekn wrong amount for calculation.so please ractify it. now as above.

Concepts of Preliminary expenses

Treatment as per As-26

It is treated as start up costs and are alowed to be write off in the year of expenses.

however as per section 35 D of income tax allows that the same will be written of 1/5 each of year.

For detial u may read Committe notes on As-26 clarification reagrding As -26/

https://www.icai.org/resource_file/18535eacq2.pdf

and Section 35D provision of Income TAx Act 1961.

are

https://lawzonline.com/bareacts/income-tax-act/section35D-income-tax-act.htm