Mahadev Ltd. has a block of assets with a written down value of 5,00,000 on 1st April, 2022 for tax purposes. The book value of the assets for…

Computation of tax base Particulars Carrying amount (₹) Taxbase (₹) Carrying balance on 1st April, 2022 5,00,000 5,00,000 Less: Depreciation (1,00,000) (1,00,000) Balance as on 31st March, 2023 4,00,000 4,00,000 No Temporary difference as on 31st March, 2023 Less: Carrying amount on the date of disposal to be reversed (accounting record) (Refer W.N.) (32,000) Less: Sale proceeds of the asset to be deducted as per tax records (1,00,000) Less: Depreciation (80,000) Accounting depreciation (4,00,000 x 20%) (60,000) Tax depreciation {(4,00,000 - 1,00,000) x 20%)} Balance of the asset as on 31st March, 2024 2,88,000 2,40,000 Working Note: Accounting book value on 31st March, 2024 = 50,000 -10,000 -8,000 = 32,000 Carrying amount is greater than Tax base which leads to Deferred Tax Liability i.e. Temporary difference = 2,88,000 -2,40,000 = 48,000 Deferred Tax Liability = 48,000 x 35% = 16,800