For the Accounting year 2008-09-in books of accounts of ABC Ltd there is a business loss of Rs. 1200 lacs and Depreciation loss of Rs. 1500 lacs and the total Net loss is Rs. 2700 lacs. In the same year ABC Ltd has deferred tax asset of Rs 900 lacs. Net loss after taxation for the year is 1800 lacs. This is adjusted against surplus brought forward from previous year of Rs. 300 lacs and the balance is adjusted against General Reserve and surplus carried to balance sheet is shown as NIL.
For the Financial year 2009-10 ABC Ltd has Business Profit of 600 lacs and Depreciation loss of 1600 lacs. The net loss (after depreciation) also is adjusted against General Reserve and surplus carried to balance sheet is shown as NIL.
Query:
In the financial year 2010-11 ABC is expecting Net profit of 1000 lacs-
As per 115JB Explanation 1 (iii) from the book profit we have to reduce:
The amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account –
a)As per books of accounts in the year 2008-09
Business loss 1200 lacs
Depreciation loss 1500lacs
Lower of the two-- 1200 lacs
b)As per books of accounts in the year 2009-10
Business Profit 600 lacs
Depreciation loss 1600 lacs
Lower of the two-- nil lacs
Can ABC deduct upto 1000 lacs against Net Profit of 1000 lacs though ABC has adjusted in the year 2008-09 the net loss against general reserve and surplus brought forward from previous year-so that book profits will be NIL and taxable payable will be nil.
CAclubindia
