« Top Headlines » Open DEMAT Account in 24 hrs  ITR Filing 2025: These individuals are exempt from paying tax. Do they need to file returns?  Full List Of Trump's Reciprocal Tariffs Announced Wednesday  Top 5 tax-saving investment options for salaried individuals to consider before March 31, 2025  5 lesser lesser-known avenues of tax saving you can use to save income tax before March 31, 2025  March 15 is deadline for last advance tax installment: Know if you must pay «  Direct tax mop-up set to rise 40% for 2nd year in a row... 71% tax trauma for India Inc: Study... » SC upholds ICAIs norm on deferred tax liability November, 23rd 2007 The Supreme Court has upheld the validity of Accounting Standard 22 prescribed by the Institute of Chartered Accountants of India (ICAI) on deferred tax liability of listed companies. The apex court dismissed a bunch of petitions filed by various companies which had challenged mandatory adoption of the accounting system, saying that it is necessary in the era of mergers and acquisitions where fair valuation principles have an important role to play. Under AS 22 system it is necessary for the companies to give effect to the concept of true and fair accrual of accounts contemplated under section 211(1) of the Companies Act. A bench comprising Justice SH Kapadia and Justice BS Reddy said that it is different from the concept of true and correct principle as the fair valuation principle brings out the real income of the company. We are of the view that the AS 22 is neither ultra vires nor inconsistent with the provisions of the Companies Act including Schedule VI, the court said.The objective behind the accounting standard is to evolve methods for more transparency and leave less room for subjective selection of methods. It is also aimed at providing for more attention to quality of estimates used in arriving at accounting income, the court said. Such a system is necessary in an era of globalisation as the new system is in sync with the international accounting standards. The Indian Accounting Standards (IAS) have to harmonise and integrate with the International Accounting Standards by which harmonisation of various accounting policies, practices and principles could take place, court said. Today we are living in the world of globalisation in which apart from merger, acquisition play an important role. The buyer wants to know the income and liabilities of a company. He wants to know the real income of the company which he proposes to buy. Because of the difference in the rates of depreciation statutorily prescribed under the income Tax Act and the Companies Act, the concept of deferred taxation has been introduced in order to obliterate the difference between accounting depreciation and tax depreciation said Justice Kapadia.