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Cin:ular No / 2019
F. No. 142f2012019·TPL
Go~'cmmcn1 of India
Minist!)' of filllUlCC"
Ocpanmcnl of Revenue
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Ccnlnd Iloard of Direct Taxes
Nt' ..· Drlhi. 2'" of OClobc'r, 2019
Subj«l: Cl uifiutionl in rt'!lpttl of oplion unciscd under Hction 115RA, of t he In come-
1-": Ac l, 1961 inicrled throu gh The Ta ution Laws (Am endment) Ordinance.
20 19· KI:.
The Ta~31ion Laws (Amcoomcnl) Ordinance, 2019 (the Ordinance) has been promulgated
by the President of India on September 20. 2019, lbc Ordinance. inter alia. inscrtl-d a new
section IISBAA in the Income-Iall Act. 1961 (the ACI) wilh effect from April 1. 2020.
2. Section 115111/ so inserted. inter "lia, provides that,-
(d) IIdomestic compon)' shall. III ils opt ion. pay lax al a lower rale of 22 per cenl for any
previous yellT relevant 10 the Assessment Year beginning on or after 1" April 2020.
subjcct to certain conditions. including that the total income ~hould be computed
without claiming any deduction or exemption:
(e) the option is required to be cxen;iSl!d by thc company before the due datc of furnishing
return of income: and
(f) the option. once exen;:iSI.,d. cannot be subsequcntly withdra\TI and shall apply to all
subsequent assessment )'cars.
3. ll1C Ordinance also amended seclion 115JB ofthc Aet n;:latingto Minimum Alternate Tax
(MA'I) so lIS to. inter alia. provide that thc provisions of said section shaJloot apply to a person
woo has eXl:n;:iscd thc option referred to und(:T newly inscned section 115BAA.
4. Representations have bttn recei,"Cd from the stakeholders seeking clarification on
following issues relating to exertisc of oplion under seclion 115BAA:
(a) Allo",ability of brought forward loss on account of additional depreciation: and
(b) AlloWllbil ity of brought fornlUtl MAT credit.
4.1 These issues have been examincd in !he Hoard and in order to provide clarity in the
mailer. the clarifications are issued in following paras.
S.l As regards ollowobili ty of brought forward loss on account of additional depreciation. it
may be noted that clause (i) of sub-section (2) of the newly inscned section l15 BAA. infer alia.
provides that the total income shall be computed without claiming any deduction under clause
(iia) of sub-section ( I) of section 32 (additional depreciation): and clouse (ii ) of the said sub-
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section provide! thai the lOla! income shall be computed without claiming sel ofT of any 10$$
canied forward from any earlier a5SC'>smcnt year if the same is allribulablc. j/llcr uliu. 10
additional depredation.
05.1.1 Therefore, a domestic company which ,,'ould exercise option for 3'ailing beroc:fit of lo"cl'
lax rate uno:Icr section 11 SflAA shall 1101 be allowed claim SCI ofT of any brought forv.'afd toss
on account of additional depreciation for an Assessment Year for "hich the option has been
exercised and [or any subsequent Assessment Year.
S.1.2 Further. as there is 00 lime line within which option under SCi:tion 1I5BAA can be
cxercised. it may be noted thaI a domestic company having brought forward losses on account of
additional dcprecitllion may. if it so desires. exercise the option after sci ofT of the losses so
accumulated.
5.2 As regards allowabilil)' of brought forward MAT credit. it may be noted thai as the
provisions of SC(:tion I J 5JB relating to MAT itsel f shall not be applicable to the domestic
company which exereises option under =:tion 115BAA. it is hereby clarified that the t!IX credit
of MAT paid b)' the domestic comr",ny exercising option under section 115BAA of the Act shall
nol be available consequent 10 cllcrcising of su,h option.
5.2.1 Further, as there is no lime line within which option under section 1l5BAA can be
exercised, it may be noted that a domestic ~ompan}' having credit of MAT may, if it 50 desires.
exercise the option after utilising the said cn..'
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