Mat credit and cary forward of losses

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Nilesh (Querist)
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09 March 2012 A company has a carry forward loss of Rs. 7 crs and MAT credit of say 1.5 crs. The current year profit is Rs. 17 crs.
Now, after setting off carry forward losses the total income liable to tax comes to Rs. 10 crs. The tax liability on the same comes to Rs. 3.32 crores and the MAT liability comes to Rs.3.38 crores.
The calculation says that I have to MAT f Rs.3.38 crores taking my total MAT credit to Rs. 4.88 crs. and Carry forward losses to Rs NIL

Is the above calculation correct???

Can i set off only 6.5 crs of my loss and bring the total income to Rs. 10.50 crs. The tax liability in this case would be Rs. 3.49 crs and MAT would continue to be at 3.38 crs. I can take MAT credit of previous years of Rs. 1.5crs and remit the balance tax of Rs. 1.99 crs(3.49-1.50). Also i can carry forward loss of Rs. 50 lakhs of previous years. By doing this I can limit my cash outflow to only 1.99 crs instead of 3.38 crs.
Please advice me in this matter....

Guest

Guest (Expert)

10 March 2012 Not possible because provisions of carry forward and set off are compulsory provisions and the assessee is deemed to have taken benefit of this provisions. Also in next year the brought forward loss will be nil since your total loss will be set off in current year. The tax payable will be minimum 3.38 crores. The tax liability calculated by you on 10.5 crores is wrong. The tax liability will be Rs. 3.38 crores i.e. minimum alternate tax. That is the intention of minimum alternate tax that irrespective of set off and other beneficial provisions assessee should pay minimum amount of tax. Hope your query is clear.

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Nilesh

Nilesh (Querist)
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10 March 2012 Thank You so much for your reply.
Was just trying my chances on this.

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