Offsetting house property losses

ITR 387 views 2 replies

serge

asst

48 Points Joined April 2011

Hello. I have almost 10 lakhs of accumulated house property losses from prior years. In the current year, I have made a profit on Income from House property - about Rs. 1 lakh. Every efiling software that I tried offsets the income of 1 lakh by bringing forward the losses from earlier years. So now my accumulated losses after offsetting is Rs.9 lakhs.

My question is: Is it mandatory to bring forward the losses from prior years to offset current income from house property? Do I have a choice to not bring foward these losses? My taxable income is below 2.5 lakhs, so my tax liability is zero in any case. So it makes no sense to bring forward and use up all the losses without any concrete tax savings. The losses may be better used in the future when my income goes above the permissible limit of 2.5 or 3 lakhs.

Would appreciate your advice on this issue. Thanks in advance.

Replies (2)

CA Salman Ansari

Salman Ansari & Assoc.

247 Points Joined June 2015

The Punjab and Haryana High Court, in similar circumstances, held that an assessee has to set off the brought forward losses to the fullest extent possible and set off cannot be limited or restricted to the extent desired by the assessee. Thus, no partial set off is possible. Brought forward losses have to be set off against the income of the year to the fullest extent possible. B.C.S.K. Chit Fund 179 ITR 137 (P&H).

It is mandatory to set off the carried forward losses in the immediately succeeding year, against the income of such succeeding year. Otherwise, the losses will get lapsed. Tyresoles v CIT 49 ITR 515 (Madras).

So there you go.