Dear All,
115JB requires adjustment of Loss Brought forward or un absorbed depreciation which ever is lower.
For Eg:
Year 1: Business Loss:50L & Unabsorbed Dep:25L Total Loss:75 L
Year 2: Profit 5L (Assessee adjusted 5 L profit against Unabsorbed depreciation as it is lower for MAT Calculation)
Year 3: Profit 10 L... Now How much is the brought farward business Loss & how much is Unabsorbed depreciation?
50 for business loss and 15 for unabsorbed deprecn...
i think 10 for unabs dep as profit of rs.15 will be adjusted..
In Year 3
Profit is 10 Lakh
Unabsorbed depreciation is 20 Lakh
Business Loss is 50 Lakh
Whichever is lower is to be adjusted in P&L for computing book profit as per 115jb. So in our case the unabsored depreciation i.e. 20lakh
so your book profit will be nil (10-10)
and unabsorbed depreciation available for set off is 10 lakh & B/f losses is 50 lakh
We have adjusted 5 lakhs in Year-2 as per 115JB not as per companes act right?
My question is if a company had profits in year after continous losses, whether that profit shall be adjusted against Business loss or un absorbed depreciation?
Will your answer is different if in year-1 Business loss is 25 and unabsorbed depreciation is 50?
Yes
Then in ur recent example in 2 nd year profit should be adjusted from the unabsorbed business loss which is 25 lakh as business loss is less than depreciation
Then in third year u need to again compare the unbosrbed business loss & depreciation whichever is lower in ur case it is business loss i.e. 20 lakh . So profit will be (10-10) Nil.
and for the subsequent PY the business losses availabe to u will be 10 lakh & Unabsorbed Depreciation will be 50 lakh
CAclubindia
