Deduction u/s 10aa.
This query is : Resolved
29 October 2013
Let a company has 2 units one is SEZ and other is normal unit.
Further company incur loss in normal unit. let suppose loss of Rs. 3L and having profit of Rs. 5L from SEZ unit
Now Income from PGBP comes to amounted Rs. 2L.
Further assesse is eligible for deduction u/s 10AA amounted Rs. 4L.
Now in this case is assesse eligible to carry forward the loss of Rs. 2L (i.e 2L-4L)???
Further company incur loss in normal unit. let suppose loss of Rs. 3L and having profit of Rs. 5L from SEZ unit
Now Income from PGBP comes to amounted Rs. 2L.
Further assesse is eligible for deduction u/s 10AA amounted Rs. 4L.
Now in this case is assesse eligible to carry forward the loss of Rs. 2L (i.e 2L-4L)???
30 October 2013
Income tax department has recently issued a circular stating that loss from non-eligible business needs to be set off against gains from eligible business before claiming deduction under 10AA. Applying that circular You shall have no carry forward loss.
However, many high courts have taken a different position wherein loss of non-eligible business cannot be set-off against gains from eligible business. In such a scenario your carry forward loss shall be Rs 3 lakhs - Rs 1 lakh (taxable SEZ profit) = Rs 2 Lakhs
Given that the CBDT circulars are binding on the assessee officer, be assured that AO won't allow for carry forward of the losses during assessment stage. You can expect some relief from High Court I believe.
However, many high courts have taken a different position wherein loss of non-eligible business cannot be set-off against gains from eligible business. In such a scenario your carry forward loss shall be Rs 3 lakhs - Rs 1 lakh (taxable SEZ profit) = Rs 2 Lakhs
Given that the CBDT circulars are binding on the assessee officer, be assured that AO won't allow for carry forward of the losses during assessment stage. You can expect some relief from High Court I believe.
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