LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Tax computation under mat 115jb

Mohammed serajuddin (Accountant and Tax Consultant) (26 Points)

25 September 2016

Under Section 115JB - MAT is calculated for Assesse whose Net Tatxable Income is less than 18% of Book Profit . WHile Computation we provide Certain deductions - one of the deduction is BROUGHT FORWARD LOSSES AND UNABSORBED DEPRECIATION - which ever is lower . - my question is if there is brought forward loss or unaborbed depreciation is there in computation of MAT ,

Then ,

Whether the deduction amount considered under forward loss or unaborbed depreciation for compuation of Book Profit U/S 115JB , can be forwarded to the next year as BRought Forward Loss or unabsorbed depreciation . OR The deduction is Final and permanent as in case of SET OFF or Brought Forward LOSSES.

Thanks for your valuable comments and clarification.

Reply
Follow
Share

3 Replies

Avishek Tibrewal (Chartered Acccountant) (37 Points)
Replied 26 September 2016

Lower of Brought Forward Losses or Unabsorbed depreciation once claimed while calculating the MAT Liability in a particular Assessment Year, the same will be reduced to the extent claimed.

Let us take certain examples,

1. Book Profit before reducing Lower of Brought Forward Losses or Unabsorbed depreciation 100

Lower of

Brought Forward Losses, 500

Unabsorbed depreciation 400

in this case book profit will be 0 and for net year available Brought Forward Losses will be 500 and Unabsorbed depreciation will be 300

2. Book Profit before reducing Lower of Brought Forward Losses or Unabsorbed depreciation 1000

Lower of

Brought Forward Losses, 500

Unabsorbed depreciation 400

in this case book profit will be 600 and for net year available Brought Forward Losses will be 500 and Unabsorbed depreciation will be 0

1. Book Profit before reducing Lower of Brought Forward Losses or Unabsorbed depreciation 400

Lower of

Brought Forward Losses, 500

Unabsorbed depreciation 400

in this case book profit will be 0 and for net year available Brought Forward Losses will be 500 and Unabsorbed depreciation will be 0

1 Like

CA Saba Naaz (Chartered Accountant) (8487 Points)
Replied 26 September 2016

Very well explained.

1 Like

Mohammed serajuddin (Accountant and Tax Consultant) (26 Points)
Replied 26 September 2016

Dear Bro,
But as per INcoem Tax ACT

Section 115JB(3) states that - 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 orsection 73 or section 74 or sub-section (3) of section 74A.

This means - THE COMPANY CAN CARRY FORWARD LOSSES AND DEPRECIATION TO THE EXTENT IT COULD HAVE CARRIED FORWARD HAD SECTION 115JB NOT THERE..

Dear Bro,
Please review your answer in the light of above Clause of Section 115JB --

https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx

Vinot Gupta Sir also have stated the Same in his books-- please refer ...

Attached File : 685385 20160926133947 115jb 3 .jpeg downloaded: 161 times