Defferred Tax Asset & Liability

[Guest]

Dear Sir,

My client is Pvt. Ltd. Company and his accounting figure  for the FY 2011-12.

Deffered Tax Assets Op. Bal -  Rs. 10489
Preliminary Expenses as per IT Act                 --  Rs. 17160
Depreciation as per Co. Acts                        -- Rs. 69722
Depreciation as per IT. Acts                         ----Rs.83370
Book profit as per P & L A/c. --- Rs. 2314052 Including STCG Rs. 132902 & LTCG Rs. 1408209 on share & Dividend Rs. 19000)

Total Income as per Computation                  --- Rs. 873200

Tax on total income       --- Rs. 2,49,285 (STCG 20533+Normal tax 228752)

Minimum alternative tax --- Rs. 437316
(on Book Profit 2314052-19000)

Prelimery Exps.   ====  Rs. 19800 (For Share Capital Increase)
Prelimery Exps.   ====  Rs. 66000 (For Share Capital Increase)
                                                  ========
Total Exps.                               85800
                                                  ========

Total Exps. 85800 /5 Years = 17160 (Deduction u/s 35D of Income Tax Act, 1961)

What is the amount of Defferred tax asset or Defferred tax liability to be recognized in current year.

And how to pass the journal entries in accounts.

Thanks & Regards

[CAGOPALJI AGRAWAL]

It is better to ask the exact issue instead of computation. 

AI Summary

Deferred tax recognition for temporary differences between book and tax treatment of depreciation and preliminary expenses. A private limited company reports temporary differences for FY 2011-12: opening deferred tax asset 10,489; preliminary expenses amortised for tax 17,160 (85,800 over five years); depreciation per Companies Act 69,722 and per Income Tax Act 83,370; book profit 2,314,052 and taxable income 873,200; computed regular tax and a higher MAT based on book profit. The taxpayer asks for the amount of deferred tax asset or liability to recognise and the journal entries to record those deferred tax effects.