Page 235 - Hitachi IR 2025

2.7.1 Current tax
Current income tax for current and prior periods is recognised at the amount expected to be paid to or recovered
from the tax authorities, using the tax rates and tax laws that have been enacted. Current income tax assets
and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted,
at the reporting date in the countries where the Company operates and generates taxable income.
Management periodically evaluates positions taken in the tax returns with respect to situations in which
applicable tax regulations are subject to interpretation and considers whether it is probable that a taxation
authority will accept an uncertain tax treatment. The Company shall reflect the effect of uncertainty for each
uncertain tax treatment by using either most likely method or expected value method, depending on which
method predicts better resolution of the treatment.
The Company offsets tax assets and tax liabilities, where it has a legally enforceable right to set off the
recognised amounts and where it intends either to settle on a net basis, or to realize the asset and settle the
liability simultaneously.
2.7.2 Deferred tax
Deferred tax assets and liabilities are recognised for all temporary differences arising between the tax bases of
assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are recognised
to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences, and the carry forward of unused tax credits and unused tax losses can be utilised. Also, deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized. Deferred tax assets and liabilities are measured using tax rates and tax
laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled. The
effect of changes in tax rates on deferred tax assets and liabilities is recognised as income or expense in the
period that includes the enactment or the substantive enactment date. A deferred tax asset is recognised to
the extent that it is probable that future taxable profit will be available against which the deductible temporary
differences and tax losses can be utilised. The Company offsets tax assets and tax liabilities, where it has a
legally enforceable right to set off the recognised amounts and where it intends either to settle on a net basis,
or to realize the asset and settle the liability simultaneously.
2.8 Property, plant and equipment
Recognition and measurement
Freehold Land is carried at historical cost, all other item of property, plant and equipment is measured at
cost, net of accumulated depreciation and accumulated impairment losses, if any. Cost includes expenditures
that are directly attributable to the acquisition of the asset. Such cost includes the cost of replacing part of
the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria
are met. When significant parts of property, plant and equipment are required to be replaced at intervals, the
Company depreciates them separately based on their specific useful lives. Likewise, when a major inspection is
performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement
if the recognition criteria are satisfied.
All other repair and maintenance costs are recognised in statement of profit and loss as incurred. The Company
identifies and determines cost of each component/ part of property, plant and equipment separately, if the
component/ part has a cost which is significant to the total cost of the property, plant and equipment and has
useful life that is materially different from that of the remaining asset. These components are depreciated over
their useful lives; the remaining asset is depreciated over the life of the principal asset.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date
is classified as capital advances and cost of assets not ready for use at the balance sheet date are disclosed
under capital work- in- progress is stated at cost less accumulated impairment loss.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate,
only when it is probable that future economic benefits associated with the item will flow to the Company and
the cost of the item can be measured reliably. The carrying amount of any component accounted for as a
separate assets are derecognised when replaced. All other repairs and maintenance are charged to statement
of profit and loss during the reporting period in which they are incurred.
Integrated Annual Report 2024-25
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