Messages

Also see Tirupathi Microtech 112 ITD 327 on ISO charges.

There are two points for discussion:

1) MAT is payable normally when Income-tax profit is negative and there fore Sec.80HHC deduction would not be available though there is export profit. In such circumstance, what is the meaning of (iv) of 115JA? Whether 80HHC can be computed on the 'book profit' or what is to deducted is only the deduction on the computed profit?

Following rulings have been held in favour of the assessee that re-computation on 'book profit' is permissible so that 80HHC deduction can be reduced even though it is not available on the computed profit.

Syncome Fouundations (SB) - Govind Rubber 89 ITD 457 - GTN Textiles 248 ITR 372 - Godrej industries 16 SOT 107.

2) Another issue is whether sunset clause in 80HHC(1B) (80% / 70%,etc)  is applicable for MAT also or 100% of 80HHC can be reduced under MAT. Ajantha Pharma (21 SOT 101) and Ranbaxy Lab(14 DTR 26) have held that sunset clause is not applicable for MAT computation.

To Mr.Sivaiah's reply: With regard to amendment in FA2008 w.e.f.1.4.2005, it is normally interpreted that only March payments on which TDS deductible is allowed if paid before the due date and for other months' payments, TDS is to be paid before the last day of the previous year.

But if we closely analyze the next proviso, the stress is on the TDS deducted and payment thereof and not to the expenditure on which TDS is deductible.

Therefore it is possible to take a view that where TDS itself is deducted in the last month on the payment pertaining to any month, it can be paid before the due date. If the TDS has already been deducted in earlier months, it should be paid before the year end.

Please elucidate.

I concur with the latest author Ms.bhuvana. Also see Amway India case on ERP reported in 21 SOT 1(SB) DELHI

S.Rajaratnam, Retd.Member ITAT and columnist  has opined that Sec40(a)(ia) is applicable only to the expenditure claimed from Sec.30 to 38 (as Sec.40 refers only 30 to 38)and not under Sec.28. Hence when the lorry freight being prime cost may not be hit by Sec.40(a). The author's view is right.

What section 71(2A) prohibits is only the set off of loss under the head profits and gains of business or profession against salary and such loss will not include the unabsorbed depreciation of the current year which is dealt with in section 32(2) separately and can be set off against salary income.

In so far as unabsorbed depreciation is concerned the scheme of section 32(2) is that unabsorbed depreciation is first to be set off against income from other businesses and thereafter to be set off against income from other heads in the same year. The balance of unabsorbed depreciation is thereafter to be carried forward and aggregated with the depreciation of the subsequent year and if there is no depreciation in the subsequent year, to be treated as the depreciation of the subsequent year. Therefore one can see that the deprecation that is brought forward from an earlier year becomes a part of the depreciation of the current year. This would therefore mean that the brought forward unabsorbed depreciation which becomes a part of the current depreciation would get the same treatment as the current depreciation and can be set off against the salary income except that the brought forward unabsorbed deprecation cannot be set off before set off of current depreciation on the basis of the law laid down by the Supreme Court in CIT v Mother India Refrigeration Industries Private Limited [1985] 155 ITR 711 (SC). In the light of the above discussion it can be seen that even the brought forward unabsorbed deprecation can be set off against the current year's salary income notwithstanding the provisions of section 71(2A). In this context a reading of the decision of the Supreme Court in CIT v Virmani Industries Private Limited [1995] 216 ITR 607 (SC) though rendered prior to the insertion of section 71(2A) would be of help.