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CS Professional · Advanced Direct Tax Laws and Practice · Computation of Total Income, Tax Liability and Filing of Return of Companies

For a company whose books show both a brought forward loss (excluding depreciation) of ₹3,00,000 and unabsorbed depreciation of ₹5,00,000, and which is not under CIRP and not otherwise covered by the special cases, what amount is reduced from book profit under section 206(1)(c)(xvi)?

The reduction is ₹3,00,000, the lesser of the book brought forward loss excluding depreciation and the unabsorbed depreciation. Section 206(1)(c)(xvi) permits only the lower of the two, not the higher or their total, and the reduction is unavailable if either amount is nil.

  1. A₹3,00,000Correct
  2. B₹5,00,000
  3. C₹8,00,000
  4. DNil

Explanation

Clause (xvi) allows reduction of the lower of brought forward loss (excluding depreciation) or unabsorbed depreciation as per books, except where either is nil. The lower figure is ₹3,00,000. ₹5,00,000 is the higher; ₹8,00,000 wrongly sums both.

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