Mat applicability

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CHRISTINE (Querist)

17 March 2017 A Private Limited Company shows book Loss of Rs. 25-00 Lakhs for F.Y. 2015-16. It also has prior year’s Loss of Rs. 60 Lakhs. The disallowance of Expenses for F.Y. 2015-16 ( due to non-payment of Statutory dues) are Rs. 29-00 Lakhs. Thus, the taxable figure is Rs. 4-00 Lakhs. But, if the prior year Loss is adjusted, taxable income becomes Zero.
In such a case, is MAT applicable?
Please guide me.

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)

17 March 2017 As per section 115JB, MAT is compulsorily for companies, as such there is no relation between MAT and carry forward of losses.

For calculating MAT, following adjustments are to be made in book profit.

1). Additions to net profit: Where followings amount (form I to IX) debited to profit & loss account:-

- Amount of income tax paid or payable and the provision thereof. ( the word “Income Tax” includes CDT u/s 115-O, Interest under income tax act, Education Cess, Income tax and others)
- The amount carried to any reserve by whatever name called. (like Reserve for expense, excess provision & etc.)
- The amount set aside for unascertained liabilities i.e. provision for unascertained liability (like pro. for Bed Debts, prov. for gratuity on ad-hoc basic etc.)
- Provision for loss of subsidiary companies
- Amount of dividends paid or proposed.
- Amount of expense relatable to any income to which section 10, 11, 12 (except sec. 10AA & 10(38)) apply. (Its mean income u/s 10AA & long term capital gain exempt u/s 10(38) are subject to MAT).
- Amount of depreciation (including depreciation on account of revaluation of asset).
- Amount of deferred tax and provision therefor.
- Provision for diminution in the value of any assets. (Like pro. for diminution in the value of investment as per AS-13/28).
- Amount standing in the revaluation reserve relating to revalued asset on the retirement or disposal of such asset. (if not credited to profit & loss account)

2). Deletion to net profit:

- Amount withdrawn from any reserves or provisions and credited to profit & loss account provided that book profit of relevant previous year should have been increased by such amount.
- The amount of income to which any of the provisions of section 10, 11 & 12 except 10AA & 10(38) apply.
- Amount of depreciation debited to profit & loss account, excluding the depreciation on account of revaluation of assets. (i.e. actual depreciation not on part of revaluation has to be deleted from net profit)
- Amount withdrawn from revaluation reserve and credited to profit & loss account to the extent of depreciation on account of revaluation of asset.
- Amount of loss brought forward or unabsorbed depreciation, whichever is less as per the books of account. However loss shall not include the depreciation. (if loss brought forward or unabsorbed depreciation is nil then nothing shall be deducted.)
- Amount of Deferred Tax, is any such amount is credited in the profit & loss account.

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