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Unabsorbed depreciation deducted in calculation of mat (Income Tax)

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This query is : Resolved



( Author )
21 August 2012

Unabsorbed depreciation deducted in calculation of book profit for the purpose of MAT u/s 115JB in a previous year.

Can the same unabsorbed depreciation set off against income in subsequent years ?

Please provide the relevant law/judgement in support of your answer.

Example:

PREVIOUS YEAR:
Unabsorbed Depreciation- 20 lakhs
Accumulated losses - NIL

Net Profit - 15 lakhs
Book Profit u/s 115JB = 15-15 = NIL


SUBSEQUENT YEAR:
Will 20 lakhs be available for set off or 5 lakhs will be available for set off against profit (under normal provisions) ?


Siddhartha Bhardwaj

( Expert )
22 August 2012

Sun section 3 of Section 115JB provides as under:

Nothing contained in sub-section (1) shall affect the determination of the amounts in relation to the relevant previous year to be carried forward to the subsequent year or years under the provisions of sub-section (2) of section 32 or sub-section (3) of section 32A or clause (ii) of sub-section (1) of section 72 or section 73 or section 74 or sub-section (3) of section 74A.

Accordingly, unabsorbed depreciation which has been utilised for the purpose of MAT is still intact for the purpose of Income Tax Act.

So, full amount of Rs. 20 can be set off against income of succeeding year.


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