Advance tax & provision for tax

Hi Mr Devarajan,

Let's see what para 27 of AS 22 "Accounting for taxes on Income"says:[An enterprise should offset assets and liabilities representingcurrent tax if the enterprise:a) has a legally enforceable right to set off the recognisedamounts; andb) intends to settle the asset and the liability on a net basis.]It is axiomatic to say that under the I T Act, the assessee doeshave a legally enforceable right, and will eventually, upon thecompletion of the assessment, set off, the advance tax against thetax payable for the year. So as per AS 22 it is mandatory to knockoff the advance tax figure with the figure for provision fortaxation for the year and show only the net amount on either side.But Schedule VI lists Advance Tax under the heading "Advancesrecoverable in cash or in kind" and the Provision for Taxation underthe head "Current Liabilities and Provisions" without mentioningwhether the two can mingle into each other.In view of the statutory backing given to AS 22 by Section 211(3A)of the Companies Act, reflecting Advance Tax and Provision forTaxation as two separate figures on either side of the Balance Sheetwould be cocking a snook at AS 22. Section 211, being part of themain legislation, will prevail over Schedule VI, which is but asubordinate legislation. But the MCA mandarins need to issue alittle amendment notification to fix this thing up.Please go to page 137 of the July 2006 issue of the Journal. Therewas an article titled "Financial Reporting Practices" under therubric "Practice Update". This issue has been discussed in detailthere.Thanks,CA Sanjeev Bedi--- In http://finance.groups.yahoo.com/group/ICAI_CIRC_MEERUT_CA/post?postID=MetphyVoN-85rTaPLD2-LQ1USOV8YASaYCBzZjNLX3s1m0yofJWuo5dr4XEpsSnjtxw1MK6VAzwNugUNebG9aufjef0yNUFjow, "Devarajan.V." wrote:>> In the case of a company, there will be both advance tax paymentand> provision for income tax. In some cases advance tax is shown under> current assets and provision for taxation is shown under current> liabilities. In some cases advance tax is being set off againstthe> provision and net amount is shown either under assets orliability?> Which is the correct way of presentation? Is there any specific> guidelines from ICAI on this?>> CA Devarajan.V>