Unabsorbed Depreciation and MAT credit

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A company filed its income tax return late and missed carrying forward unabsorbed depreciation and MAT credit for six years. While unabsorbed depreciation can generally be carried forward indefinitely, even if the related business is discontinued, it must have been declared in previous returns. Similarly, MAT credit requires the original return to be filed on time to be carried forward. Therefore, claiming these past credits in the current year is unlikely if they weren't declared previously, although there might be a slim chance for the MAT credit.

Kishore Ersavadla

Kishore Ersavadla (Querist)
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01 November 2021 Assessee(Company) has filed Income Tax return belatedly without carry forwarding the Unabsorbed depreciation and MAT credit for previous 6 years. Now Company wants to claim the same in the Current Year Income Tax return. Can he do so?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 November 2021 Yes, both can be claimed.
Unabsorbed depreciation can be carried forward for an indefinite period and can be set off against any other income (other than salary). The unabsorbed depreciation can be carried forward even if the business related to such depreciation has been discontinued.

MAT provisions do not require that the return should be filed on or before the due date to carry forward the MAT credit. The restriction is only for carry forward of losses.

Kishore Ersavadla

Kishore Ersavadla (Querist)
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01 November 2021 Thank you for your reply. But the company did not shown unabsorbed depreciation and MAT credit in previous filed returns. So is company is eligible for claiming now?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 November 2021 If not declared in the respective ITR, how can it be said to be 'carried forward?'

Kishore Ersavadla

Kishore Ersavadla (Querist)
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01 November 2021 In previous years did not carry forwarded the unabsorbed depreciation and MAT credit. Now can they carryforward the previous years figures from now onwards?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 November 2021 No. The original returns should contain the carry forward details, otherwise it is not allowed. But you can try for MAT credit.

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