CA JAIKRIT MALIK (CHARTERED ACCOUNTANT ) (71 Points)
03 November 2011
Sir,
Greetings for the day
1)My query is to whether there is any Income Tax provision to set off Subsidiary Company losses with its Holding Co's.
2) Is it be effected if subsidiary company is 100 % Wholly owned or not ?
3) if Subsidiary Company situated outside India, what will be the applicable Provision to set off Losses from holding Company ?
Thanks & Regard
Giridhar S Karandikar
(Team Lead)
(7543 Points)
Replied 16 November 2011
As per Explanation 1 to Section 115JB of the I-T Act, the amount by way of provision of losses of subsidiary companies are required to be added back while calculating the book profit of the company. Hence if MAT is applicable to the company because the tax liabiltiy under the normal tax provision is less than 18% of the book profit camputed u/s 115JB then the loss would not be deductible.
else it would be deductible under normal provision of the IT Act.
The section providees that the holding company should be a company registered under the companies act, 1956 whihc should be an Indian company. It doesn't matter if the subsidiary company is an Indian co or not
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