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setting off of unabsorbed depreciation against MAT

Tax queries 1148 views 1 replies

SURESH KUMAR BHUTRA

CHIEF ACCOUNTANT

24 Points Posted on 30 July 2010

I AM ACCOUNTS HEAD OF A GROUP WHERE FROM LAST 9 YEARS THEY ARE CHARGING DEPRECIATION OF A RESIDENTIAL FLAT USED BY THE DIRECTORS BUT DUE TO NO INCOME IN THE SAID COMPANY DEPRECIATION AS PER I.T. TOTALLY REMAINS UNADJUSTED IN LAST 9 YEARS TAKING THE LOLL OF LOSS TO 7.50 LACS.

NOW IN 31.03.2010 I WANT TO WRITE BACK THE DEPRECIATION LEVIED IN LAST 9 YEARS.

I WILL HAVE TO BOOK THE WIRTTEN BACK DEPRECIATION AS PER I.T.IN BOOKS BY SHOWING INCOME AMOUNTING TO RS.3.25 LACS AND IN I.T.COMPUTATION I HAVE TO ADD DEPRECIATION BENEFIT TAKEN EARLIER TO THE TUNE OF 5.03 LACS AND ACCORDINGLY AFTER SETTING OF THE UNABSORBED DEPRECIATION OF LAST 9 YEARS .78 LACS WILL BE LEFT OUT.

MY QUESTION IS WHETHER TAX ON MAT WILL BE APPLICABLE IN THIS CASE AS I AM WRITING BACK THE SAME DEPREIATION WHICH WAS CLAIMED EARLIER.

MAT ON 8.28 LACS ?

REGARDS

SURESH KUMAR BHUTRA

Replies (1)

Member

Management

325 Points Posted on 30 July 2010

I am afraid the facts are not clear. And please don't use capital letters to post your query, it amounts to shouting.

I presume that you have charged depreciation in the books for 9 years but you had no income all these years and hence no tax liability, hence carried forward unabsorbed depreciation as per books (what amount ?)

Now you want to write back the same amount in books. How does that result in book profit since there is no income? If, as I understand that this year there is an "income" of Rs.3.25 lakhs, this would be the income for MAT since the book depreciation written back will be cancelled by the depreciation allowed earlier and which is unabsorbed as on date.