Accounting for Deferred Taxes (AS 22): Has the Dust Finally Settled in India?

Abstract

Is Accounting Standard 22 (AS 22) on 'Accounting for taxes on income', insofar as it relates to deferred taxation, inconsistent with and ultra vires the provisions of the Companies Act, 1956, the Income-tax Act, 1961 and the Constitution of India? This was the question before the Apex Court of India in a case recently decided by it on November 19, 2007 by a mega judgment of nearly 50,000 words running into more than 200 pages. In the light of the said judgment, this paper attempts to find out whether the dust on AS 22 has finally settled in India since its introduction in 2001.

JEL Classification: M41, M44, M47, H25