AS - 22 Urgent Query

There is loss as per both books of accounts and income tax so is it necessary to provide for DTA or DTL? The company was incorporated 3 years back and has loss both as per books of accounts and income tax for all the 3 financial years.

However the loss as per IT is greater than loss as per books of account for all the 3 years.

Replies (3)

Paragraph 17 of AS 22 requires that “Where an enterprise has
unabsorbed depreciation or carry forward of losses under tax
laws, deferred tax assets should be recognised only to the extent that
there is virtual certainty supported by convincing evidence that
sufficient future taxable income will be available against which such
deferred tax assets can be realised”.  Please download the following file 

https://www.icai.org/resource_file/321asi_accstand9.pdf

Refer to this one www.icai.org/resource_file/10502jan05p875-878.pdf

If you have losses as per both books then questin of DTL doesn't arise at all. For DTA , you should create the same only if you have virtual certainty that you will make profits in coming year & your current losseswill be abosrbed.

 

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