Applicability of mat on writing off of interest on govt.loan

This query is : Resolved

Snehanshu Kar Chaudhuri (Querist)
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17 August 2011 Govt. of India has decided to write off the Loan and unpaid interest accrued thereof of one of the Public sector Enterprises by way of Restructuring process.Interest accrued every year was disallowed by Income Tax Department u/s 43B on the ground that no repayment of interest was made by the Establishment.
In the stated circumstances I want to know whether waiver of interest by Govt.of india will attract MAT liability.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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18 August 2011 There are 2 Parts
1) Principal
2) Interest

Waiver of Principal amount is a capital receipt

Waiver of interest is a revenue receipt. Now the dis-allowances for interest is not covered in the 115JA. So what you have to do is the portion which has been disallowed you can take it to the items relating to the prior period and take the advantage

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