According to MAT provisions-
"Brought forward loss or unabsorbed dep. whichever is less as per books is to be deducted for computing book profit.
But what is "brought forward loss" ?
Closing balance of Profit & Loss A/c or net loss before tax in current year and of previous years
Dear Pranjay,
Example - A Ltd. newly set up it's business in 2008-09
P/ L A/c for 2008-09
|
Expenses |
Amount |
Income |
Amount |
|
To opening Stock |
Nil |
By sales |
10,000 |
|
To Purchases |
8,000 |
By Closing Stock |
2,000 |
|
To Expenses |
6,000 |
By Net Loss |
8,000 |
|
To Depreciation |
6,000 |
|
|
|
|
20,000 |
|
20,000 |
For FY 2009-2010,
Brought Forward Loss will be Rs. 2,000 (Rs. 8,000 - Rs. 6,000)
Unabsorbed Depreciation will be Rs. 6,000
Dear Amir brother...........
Is it not Loss before tax i.e. after adjusting other sources of income/loss??????
please clarify..............
Dear Balaji,
Plz clarify ur question......??
What I could get is u want to know that the word "Brought Forward" includes incomes only from PGBP or from all heads of Income....
is it......??
Bhai, MAT is applicable on companies & all heads of Income comes in P/L A/c only..I mean in accounting we don;t prepare separate P/L for Business Income & Other sources........
Yes Brought Forward will includes incomes of all heads.............
Thank you for your reply brother...........
i understand now.....Thank you once again......
Dear Amir, let me clarify my query, suppose-
2008-09 2007-08
Net Loss (1,00,000) (50,000)
Op bal of P&L 1,50,000 2,00,000
Bal c/f to B/s 50,000 1,50,000
Now, in this case what is brought forward loss? Rs.150,000 (i.e. net loss of both the years of Rs. 100,000+50,000, after reducing unabsorbed depreciation) or there would be no brought forward loss since the closing balance of P& L is positive.
Dear Pranjay,
In ur example in 2008-09, there would be NEITHER brought forward loss NOR Unabsorbed Depreciation.
Since closing balance is profit
Same case with 2009-10
Yes and correspondigly there would be deduction for the purpose of computing book profit under MAT.
If there is NEITHER brought forward loss NOR Unabsorbed Depreciation as told by Mr. Amir then Aditya what do you mean by- "correspondigly there would be deduction for the purpose of computing book profit under MAT".
Isnt it mean that nothing is deductible for computing book profit since there is no brought forward loss or unabsorbed dep.
Am I Right Amir?
Am I Right Aditya?
Dear Pranjay,
Yes nothing will be deducted in computing Book Profits...
Further I think Aditya Sir statement should be read as follows (I feel there is some typing error)-
"correspondigly there would be NO deduction for the purpose of computing book profit under MAT."
Dear friend pranay,
As per my opinion in the example referred by you above, the b/f loss would be Rs. 150000. This is because
Under the regular provisions of the Act, the losses are carried forward and set off against profits of future years to determine the taxable income for the future years. The losses of the current year are never set off against the profits of the prior years. It may be noted that the profits of the prior year have already been offered to tax and hence, the intention is to provide the assessee the benefit of losses so that the total amount subjected to tax does not exceed the total profits earned by the assessee over the years. In your example if we consider that since there is a positive balance at the end of 2008-09 we are actually setting off the losses against the profits of earlier years that have already been offered to tax. No doubt that Section 115JB is a code in itself but reference to the general provisions of the act is necessary in order to avoid a strange result.
Regards,
Chintan
Thank you everbody for all your replies
Yes my reply should be read as mentioned by Amir.
What is the time frame till which such book losses and unabsorbed depreciation as per books of accounts can be carried forward?
"book loss" will be considered before tax provision or after tax provision ?
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