brought forward loss or unabsorbed depreciation

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Nikhil Kumar (Querist)

22 June 2011 What do we mean when we say 'brought forward loss or unabsorbed depreciation as per books of account' ?

Is it the same thing and amount as we calculate in the Income Tax reutrn computations?

For example- if the loss is more than 8 years it is not carried forward for Income Tax purposes.... will the same treatment be given in the books of account as well?

this is in relation to MAT calculation

Pushpa Raj Dhakal

Pushpa Raj Dhakal (Expert)

22 June 2011 Brought forward loss means business loss excluding depreciation. if the company suffer a loss before claiming depreciation, than the entire amount of depreciation is unabsorbed depreciation. however, if the company suffers a loss as a result of depreciation amount than business loss will be nil and balance of depreciation amount will unabsorbed depreciation. business loss and unabsorbed depreciation under IT act is different from books loss and depreciation. it is determine d while preparing memo of taxable income.

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Nikhil Kumar

Nikhil Kumar (Querist)

22 June 2011 Thank you Mr Pushpa Raj for the reply.

Extending the query, if we are doing MAT calculation and there is a business loss in our books of accounts standing for more than 8 years, can we take it as a deduction?

Would appreciate if we can support this with something conclusive

CA Harish Suwalka

CA Harish Suwalka (Expert)

23 June 2011 as the loss is to be taken as per books of accounts, so a business loss standing in books of accounts standing for more than 8 years can be considered for deduction

in Fascel Ltd V ITO (2008) case Ahd High Court provided that adjustment is required even if deduction is not permissible under income Tax Act,

Nikhil Kumar

Nikhil Kumar (Querist)

23 June 2011 Thanks a lot Mr Harish

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