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Set-off & carry forward of business losses

karthick (article assistant) (51 Points)

14 December 2017

Scenario:
Assessee status - LLP
C/f business losses - Rs. 1.7 Cr (non-speculative)
Unabsorbed depreciation - Rs. 75 lakhs
Taxable book profit - Rs. 1.77 Cr

Query:
While computing AMT tax liability, can the assessee set off both business losses and unabsorbed depreciation in the same AY.

Thank you in advance!!!!

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2 Replies

Sahil Jain (FAFD, DISA, CA) (Practicing Chartered Accountant ) (2476 Points)
Replied 14 December 2017

Yes, while computing AMT you can set-off both business losses and unabsorbed depreciation in same AY

Prajjwal Kaushik (Finance Professional) (6216 Points)
Replied 14 December 2017

The bare provisions of the act regarding AMT (s.115JC) reads as "...Adjusted total income referred to in sub-section (1) shall be the total income before giving effect to this Chapter as increased by..."

This makes it clear that:

At first, total Income of the assessee shall be calculated as per the normal provisions shall be calculated and then specific adjustments shall be made to it; and
The section overrides provisions of the act, only in respect of the specific adjustments given in the section and all other provisions of the Act such as Advance tax, carry forward of losses shall apply to the assessee shall apply in a normal manner.

Therefore, while calculating AMT in the instant case, carry forward of business loss as well as unabsorbed depreciation shall be allowed in the same AY.