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No MAT if applications admitted under Bankruptcy Code

By TIOL News Service

NEW DELHI, JAN 07, 2018: IN a major move, the Union Govt has granted exemption from MAT to all such companies whose applications have been admitted under the IBC, 2016.

The existing provisions of section 115JB of the Income-tax Act, 1961 provide, that, for the purposes of levy of Minimum Alternate Tax (MAT) in case of a company, the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account shall be reduced from the book profit.
 
In this regard, representations were made to the Govt that the companies against whom an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under section 7 or section 9 or section 10 of the Insolvency and Bankruptcy Code, 2016, are facing hardship due to restriction in allowance of brought forward loss for computation of book profit under section 115JB of the Act. 
 
With a view to minimize the genuine hardship faced by such companies, it has been decided, that, with effect from Assessment Year 2018-19 (i.e. Financial Year 2017-18), in case of a company, against whom an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under section 7 or section 9 or section 10 of the IBC, the amount of total loss brought forward (including unabsorbed depreciation) shall be allowed to be reduced from the book profit for the purposes of levy of MAT under section 115JB of the Act.
 
Appropriate legislative amendment in this regard will be made in due course, says the Govt Press Release. 


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