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115 JB - UNABSORBED DEPRECIATION as per Books of Accounts?

CA Nischal Agrawal (CA & Information Technology) (96 Points)

26 October 2009

115jb requires adjustment of unabsorbed loss or unabsorbed depreciation whichever is less ( As per books of accounts)

My query is what is considered as books of accounts ?

1) if books as per company act schVI etc - then what would be unabsorbed depreciation ? since there is nothing in company act wrt to unabsorbed depreciation

2) if books as per income tax .

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8 Replies

CA Suri Kota (Assistant Manager @ EY) (955 Points)
Replied 26 October 2009

Yes. There is no concept of unabosrbed depreciation in Companies Act. Only in the case of Income Tax Act, unabsorbed depreciatio and unabsorbed business losses comes into picture. Hence these are considered as per Income Tax Act.

CA Sidhi Gaur (Chartered Accountant) (247 Points)
Replied 27 October 2009

AGREE

CA Ghanshyam Joshi (CA, Dip IFR (ACCA UK)) (3229 Points)
Replied 08 November 2009

Unabsorbed depreciation is only in IT Act and not in companies Act. Unabsorbed depreciation can be carried forward without any limit of years where as unabsorbed business loss can be carried forward upto 8 years.

As per Sec 115JB whichever depreciation rates you follow (Companies/Income Tax) Companies Act only indicate the minimum rate of depreciation.

Brought forward business loss or unabsorbed deprecation as per books of account, whichever is less taken on cumulative basis

kabirsen (student) (251 Points)
Replied 08 November 2009

since there's no definition of unabsorbed depriciation in co act 1956...so we shud give common meaning to the term "unabsorbed dep" as per rules of interpretation...

more over mat is to be supported by a report certified by a ca...and ao cannot challenge an audited bsheet presented by a co. in its annual meeting(ie audited annual a/cs)(as per cit vs appollo tyres)

therefore unabsorbed dep 2 b calculated in the manner done in it act 1961 but we will only use co. act figure(used in audited annual a/cs of co.) for this purpose of calculation unabsorbed dep and a/o cant challenge such calculation

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CA Sachin D Jain (FCA, CS, DISA (ICAI)) (1474 Points)
Replied 12 September 2011

Dear All,

One company has already adjusted lesser of unabsorbed depreciation and business loss as per books under MAT, last year i.e. FY 09-10.

But still, there are carried forward losses in the form of Debit balance of profit and loss account. Now, in FY 10-11,

1. Should the company again make backward calculation to check the figure of lower of unabsorbed depreciation and business loss, to claim lesser of the two from current year calculation of MAT.

Or 2. No deduction on account of lower of unabsorbed depreciation and loss will be allowed in FY 10-11, as the Company has already taken the benefit in FY 09-10.

Please clarify.