CBDT issues clarifications in respect of option exercised under s. 115BAA

The CBDT in respect vide circular no 29/2019 dtd. 2nd October 2019 has issued clarifications incase the taxpayer opts for s. 115BAA of the Income Tax Act inserted through The Taxation Laws (Amendment) Ordinance, 2019.

  1. The Ordinance states that once, the taxpayer exercises the option to pay tax under s. 115BAA, it cannot be subsequently withdrawn and applies to all subsequent assessment years. The CBDT circular attached addresses, the following concerns raised by taxpayers :

-          Allowability of brought forward loss on account of additional depreciation;

-          Allowability of brought forward MAT credit

  1. While exercising s. 115BAA, the domestic company cannot claim the benefit of additional depreciation under s. 32(1)(iia). Even the brought forward losses attributable to the same cannot be carried forward. Hence, a domestic company which exercises the option to pay taxes under s. 115BAA, cannot claim depreciation benefit under s. 32(1)(iia) for the year in which the option has been exercised and any other subsequent year. However, there is no time limit for the domestic company to opt for s. 115BAA. Accordingly, once all the brought forward losses attributable to additional depreciation have been set off, option to pay taxes under s. 115BAA can be exercised.
  1. Provisions of s.115JB are not applicable to companies paying taxes under s. 115BAA. Hence, it is clarified that tax credit of MAT paid by the domestic company exercising option under s. 115BAA is not available consequent to exercising such option. Further, since there is no timeline prescribed to opt for s. 115BAA, after the credit of MAT has been utilized, the domestic company can exercise s. 115BAA.

Complete notification here below for your reference :

  1. https://www.incometaxindia.gov.in/communications/circular/circular_29_2019.pdf