REGARDING APPLICABILITY OF MAT PROVISION

This query is : Resolved

Suresh S. Tejwani (Querist)
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26 October 2023 WHILE CALCULATING BOOK PROFIT U/S 115JB "UNABSORBED DEPRECIATION OR BUSINESS LOSS WHICHEVER IS LOWER" IS TO BE DEDUCTED FROM NORMAL PROFIT FOR THAT IF CARRIED FORWARD BUSINESS LOSS IS ZERO AND UNABSORBED DEPRECIATION IS THERE,
THEN UNABSORBED DEPRECIATION IS TO BE DEDUCTED OR ZERO FIGURE TO BE DEDUCTED?(BECAUSE BUSINESS LOSS CARRIED FORWARD IS ZERO)

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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15 January 2024 Under section 115JB of the Income Tax Act in India, while calculating book profits for a company, the provision states that the amount of loss brought forward or unabsorbed depreciation, whichever is less, shall be deducted from the net profit.

If the carried forward business loss is zero, but there is unabsorbed depreciation, then the unabsorbed depreciation will be deducted. In other words, even if the business loss carried forward is zero, if there is unabsorbed depreciation, it will be considered for deduction while calculating book profits under section 115JB.

To summarize, in your scenario, the unabsorbed depreciation will be deducted from the normal profit, even if the carried forward business loss is zero.

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