25 September 2010
My specific question is to the correct amount of carry forward of accounting business loss and unabsorbed depreciation allowance for being adjustment while determining the currecnt year's Book Profit U/s 115JB
Accumalated Profit as per Balance Sheet till 01.04.2008 - Rs.1,83,73,056/- Entries in the Profit & Loss for the year 2008-09 are as follows: Loss before Depreciation & Tax for the year ended 31.03.2009 - Rs. 1,43,26,571/- Depreciation under Cos Act for the year ended 31.03.2009- Rs.3,46,05,477 Loss before Income tax Rs.4,89,32,048/- Provision for Current Tax - Rs. Nil FBT - Rs.1,36,664/- Deferred Tax Asset - Rs.51,64,943/- Loss After Tax -Rs. 4,39,03,769/- Prior Period Expenses - Rs.5,15,003/- Balance accumalated profit to be carried in the Balance Sheet - Rs.2,60,45,716/-
For the year 2009-10, though the Compnay has Taxable profits, it has set of brought forward business loss and unabsobed deprecaition allowance thereby taxable Total Income is Nil. However, it results in Book Profit. Now, which of the follwing figures are to be considered for being set of against Current Book Profit
Option I: Unabsorbed Depreciation allowance - Rs.3,46,05,477/- Brought forward business loss - Rs. 1,43,32,47/- Total Rs 4,89,32,047/-
Optoion II Unabsorbed Depreciation alloawance Rs.2,60,45,716/- being balance available accumalated profit which is less than above depreciation amount Rs.3,46,05,477/- Brought forward business loss becomes NIL since balance accumalted profit does not exceed above depreciation
Which of the above two options are availble for set off ?????
25 September 2010
Extract of Explanation of Section 115JB(2)
Explanation.—For the purposes of this section, “book profit” means the net profit as shown in the profit and loss account for the relevant previous year prepared under sub-section (2), as increased by— (a).........(f)
and as reduced by— ... (iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account.
Explanation.—For the purposes of this clause,—
(a) the loss shall not include depreciation;
(b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil; or]
25 September 2010
The total acculumated loss of Rs. 2,60,45,716/- comprises of Depreciation only.
Thus the Unabsorbed loss is Nil as entire loss appearing in the balance sheet represents depreciation.
Since the the deduction available is lower of unabsorbed depreciation or brought forward loss, Brought forward loss being ZERO, in my opinion, no deduction is allowable.
One company has already adjusted lesser of unabsorbed depreciation and business loss as per books under MAT, last year i.e. FY 09-10.
But still, there are carried forward losses in the form of Debit balance of profit and loss account. Now, in FY 10-11,
1. Should the company again make backward calculation to check the figure of lower of unabsorbed depreciation and business loss, to claim lesser of the two from current year calculation of MAT.
Or 2. No deduction on account of lower of unabsorbed depreciation and loss will be allowed in FY 10-11, as the Company has already taken the benefit in FY 09-10.
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