Mat credit is treated as deferred tax asset

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This query is : Resolved

Ramesh (Querist)

06 December 2012 Hi All,

Please advise whether MAT credit is treated as Deferred tax Asset in following case:

A company can avail 80IA benefits up to Asst Year 2016-2017. A company is having an unabsorbed depreciation of 1000 cr. which will be set off in next year. Due to this company is paying MAT. This MAT credit will be utilised against payment of normat tax from Asst Year 2017-18.

Thanks and regards,
Ramesh

CA Dhaval Patel

CA Dhaval Patel (Expert)

06 December 2012 As per Act. Standard Interpretation 7:

Section 211(1)
of the Companies Act, 1956, provides that every balance sheet of a company
shall be prepared in the form set out in Part I of Schedule VI, or as near
thereto as circumstances admit. It is, therefore, clear that format of balance
sheet as set out in Part I of Schedule VI to the Companies Act, 1956, has inbuilt flexibility to accommodate necessary modifications. A deferred tax
asset is normally more liquid (realisable) as compared to fixed assets and
investments and less liquid as compared to current assets.

AS MAT IS LESS LIQUID AS COMPARED TO CURRENT ASSET, IT WOULD BE APPROPRIATE TO CONSIDER THE SAME AS DTA.

Ramesh

Ramesh (Querist)

06 December 2012 Thanks Sir.
Sorry, I could not explain properly. In fact my query is from Tax point of view. I want to know that while calculating deferred tax liability, MAT will be cosidered as deferred tax asset.
Rgds,
Ramesh

CA Dhaval Patel

CA Dhaval Patel (Expert)

06 December 2012 Absolutely NO!!!

I guess there is nothing like DTA & DTL from Tax point of view.

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