Can i deduct Misc Exp (assets) from reserves to get accumulated profit for section 2 (22)(e) of Income Tax Act..
2 Replies
Amir
(Learner)
(4016 Points)
Replied 09 February 2010
Dear Pravin,
Wonderful question Brother....
The term "accumulated profits" has not been defined in the Act
SC has held that the term should be understood in it's "commercial sense"
Sec 205 of Companies Act says that "Dividend cannot be paid out of accumulated profits unless current losses are made good."
In view of above I think IT WILL BE DEDUCTED...
CA lakshmikanth
(Chartered Accountant)
(238 Points)
Replied 09 February 2010
dear pravin
what type of mise exp not mentioned
strictly speacking as per schedule VI requriments mise exp can't dedected reserves and also your question is not clarity what type of reserves either capital reserve or general reserve
if general reserve P&L account ( debit balance) may be adjusted otherwise it can't be adjusted
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