Tax u/s 115jb

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Querist : Anonymous

Querist : Anonymous (Querist)

10 April 2012 One of my client pvt. ltd. co. deals in property business. During FY 2009-10 it incurs loss of Rs.9.00 lacs as business loss mainly due to interest cost (And NIL Unabsorbed Dep.Loss). For the F.Y.2010-11, it had earned profit of Rs.5.00Lacs on sale of land. So my question is whether tax is payable u/s 115JB on Rs.5 Lacs book profit ( as there is nil unabsorbed dep. loss b/f) or the total profit will be reduced by the b/f business loss and tax liabilty will be Ni.?

CA Kishore Tallam

CA Kishore Tallam (Expert)
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10 April 2012 Here, u have mixed tax on normal profit and book profit.
In case of book profit, there is no concept of set off losses except book losses to the extent of depreciation can be set off against current year book profit.
However, in case of income tax, carry forward business loss cannot be set off against capital gain.

Querist : Anonymous

Querist : Anonymous (Querist)

11 April 2012 Here book profit is equal to normal profit, i.e. Rs.5 Lacs, and b/f business loss is Rs.9 Lacs and b/f unabsorbed dep. is NIL. So whether the co. has to pay taxes u/s 115JB @ 18% on Rs.5 Lacs or not?

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CA Kishore Tallam

CA Kishore Tallam (Expert)
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12 April 2012 Yes. The Company has to tax under Sec 115JB i.e. MAT.
Now the normal profit as per income tax is NIL for the CY since the current year profit of Rs. 5 lacs is set off againt b/f business loss of Rs. 9 lacs and c/f business loss is Rs. 4 lacs.
Since the tax under normal provisions is less than 15% of tax under 115JB, the company is liable to pay tax under MAT and it is eligible to take MAT Credit of total tax paid by it excluding interest on delayed payments of tax.

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Querist : Anonymous

Querist : Anonymous (Querist)

12 April 2012 Sir, Now for how many fin. year the company can claim MAT credit of tax paid?
And whether it is allwable from the normal tax payable in future years?

CA Kishore Tallam

CA Kishore Tallam (Expert)
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12 April 2012 The Company can carry the MAT Credit for 10 years. If there after in any of the year, the company is liable to pay tax under normal provisions, then such liability can be cleared using this MAT Credit.
A small rectification in earlier reply.
MAT is applicable if profit under normal provisions is less than 18% of book profit.

Mihir Doshi

Mihir Doshi (Expert)
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12 April 2012 Agree with Expert

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Querist : Anonymous

Querist : Anonymous (Querist)

12 April 2012 Sir, In B/sheet of the co., where this MAT Tax Credit will be shown (is it excluding interest u/s 234B/C) and whether MAT tax paid will be allowable exp.?

And sir please make it clear, whether after 10 years, the co. can still take credit of the same from normal tax payable?

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CA Kishore Tallam

CA Kishore Tallam (Expert)
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12 April 2012 Yes. MAT Credit is only for income tax and not for interest u/s 234B and 234C.
MAT credit is not an expenditure in the year of taking credit.
After 10 years, then the credit will be expired and it has to be charged off to P&L Account. But it will be disallowed.

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