A company has Rs 25 lac DTA balance as on 31-3-15. Current year there is DTA on account of current depreciation 2 lac and DTL on account of reversing of timing differences (43 B)items of Rs 5 lacs.
Quries are: 1) Can the current DTA (rs 2 lac) be set off against current DTL (5 Lac) and the net computation for the year be shown at DTL 3 lac 2) Can this Net DTL of 3lac (or any other amount) be adjusted against opening DTA of Rs. 25 Lac. 3) Further, as there is total uncertainty about future earnings of the company, should the balance in DTA (Be it 25 lac as it is OR 22 (25-3) lac) be charged to the P&L of the current years. Please reply in detail.
Naman Mishra Kannauj
As per AS-22 "Taxed on Income", DTA/DTL can not be set off, unless the are reversal of the already existing DTA/DTL.
Therefore answer to your first question is - NO. You have to disclose the DTA/DTL in the following manner -
Note - Deferred tax assets/liability (net)
A. Deferred Tax Asset
- On account of fixed assets - 2 lakh
- On account of expenses
Opening - 25 lakh
less: reversal - (5)
Closing - 20 Lakh
Total Deferred Tax Assets - 22 Lakh
B. Deferred Tax Liability, if any - xx
Deferred Tax Assets/Liability (net) - xxx lakh