Section 115JB: Book Profit

[Bijay Shrestha]

Dear Friends,

Under Section 115JB of IT Act 1961, in order to Compute Book Profit, the following is to be reduced from Profit/Loss as per Companies Act 2013:

(i) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account.

Explanation.-For the purposes of this clause,- (a) the loss shall not include depreciation;

(b) the provisions of this clause shall not apply if the amount of loss brought forward or unabsorbed depreciation is nil

Now My queries are:

1. What is the Loss Brought Forward here ? Is it as per Sch III of Companies Act 2013 OR as per Loss computed as per 115JB (i.e. Book Loss) ?

For Example: Suppose 1st Year, Loss as per Sch III is ₹ 1,00,000/- and Book Loss as per 115JB is ₹ 75,000/- (because of some additions and Deletions) Now in 2nd Year, for the purpose of 'Loss Brought Forward' under section 115JB, Which amount is to be taken : ₹ 1,00,000/- or ₹ 75,000/-. ??

2. For Unabsorbed Depreciation as mentioned above, Depreciation is to be computed as per Companies Act OR Income Tax Act ?

3. From following example, please advise Amount to be taken for loss brought forward or unabsorbed depreciation for Book Profit Computation u/s 115JB for FY 2015-16:

Financial Year	Profit/(Loss) as per Sch III (before Depreciation)	Depreciation as per Companies Act	Total Profit/(Loss) as per Sch III
2011-12	(50,000)	25,000	(75,000)
2012-13	80,000	1,00,000	(20,000)
2013-14	60,000	40,000	20,000
2014-15	(75,000)	35,000	(1,10,000)
Total	15,000	2,00,000	(1,85,000)

Please kindly suggest.

AI Summary

Book profit computation under section 115JB: whether carried forward loss and unabsorbed depreciation follow books or tax rules. Section 115JB raises two interpretive questions: whether 'loss brought forward' means the loss as per the company's financial statements under Schedule III or the loss as computed for 115JB after adjustments; and whether 'unabsorbed depreciation' should be measured using Companies Act (book) depreciation or Income Tax Act (tax) depreciation, with a request to apply these points to a multi-year numerical example.