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Question ID : 42237

Impairment

A company has impaired some of its Plant and Machinery as per applicable Accounting Standard. Such impaired amount (WDV of the asset as per books on that date) is written off as impaired as per profit and loss account. Is this impaired amount allowable as expenditure under Income Tax Act? Under Income Tax, the P & M Block continues with other assets as there are other plant and machineries. Let know if the impaired amount is allowable expenditure under IT Act.

Posted by CA. MAHESH KRISHNAN on Mar 17, 2022

Filed Under DIRECT TAXES

Answer ID : 81436

Not allowed as it is a notional loss.

Posted by VINAY BHARGAV KUMAR G on Mar 21, 2022
Answer ID : 81449

Not at all. The impairment is an accounting adjustment and it can reverse in the another financial period after its occurrence as per AS or Ind AS in one financial year. Hence it will never be allowed as an expenditure at the time of Computation of Income Tax Liability.

Posted by CA. JHA SHANKAR KUMAR on Mar 31, 2022