An ordinary company has ₹14 lakh of brought-forward loss excluding depreciation and ₹9 lakh of unabsorbed depreciation, both as per its books. No special insolvency or reconstruction rule applies.…
Question and options
An ordinary company has ₹14 lakh of brought-forward loss excluding depreciation and ₹9 lakh of unabsorbed depreciation, both as per its books. No special insolvency or reconstruction rule applies. What amount is reduced in the MAT book-profit computation?
₹23 lakh
Nil
₹9 lakh
₹14 lakh
Answer and explanation
Correct answer: C - ₹9 lakh
Section 206(1)(c)(xvi) of the Income-tax Act, 2025 reduces book profit by the brought-forward loss (excluding depreciation) or the unabsorbed depreciation as per the books, whichever is less, so ₹9 lakh is reduced. Deducting the total of ₹23 lakh, or only the larger ₹14 lakh, ignores the lesser-of rule.
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