• Service: Tax, International Executive Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/23/2013

India - Setoffs, carryforwards for losses of section 10A-eligible units 

July 23:  The KPMG member firm in India prepared reports on the following developments (read the July 2013 reports by clicking on the hyperlinks provided below):
  • Clarifying setoff and carryforward rules when there are losses in relation to units elegible for tax benefits under sections 10A, 10AA, 10B and 10BA - How taxpayers are to set off and carry forward losses under sections 10A,* 10AA, 10B and 10BA of the Income-tax Act, 1961, has been uncertain. There has been no consistent approach by either the tax authorities or the courts. For instance, while some tribunals and courts have held that the losses of ineligible units must be set-off against the profits of the eligible units, others have taken the view that such losses are not to be set-off with the profits of eligible units in computing the amount of deduction under the sections.

    Read a July 2013 report [PDF 192 KB]

    *The tax benefit under section 10A is a deduction computed as follows:
    Profits of the undertaking x [(Export turnover in respect of the article/ thing/ computer software) ÷ (Total turnover of the business carried on by the undertaking)]

  • “Improvement expenses” on new ready-made residence are eligible for capital gain exemption - The Ahmedabad Bench of the Income-tax Appellate Tribunal held that improvement expenses incurred by an individual after purchasing a new house to make the house habitable are eligible for a capital gain exemption under the Income-tax Act, 1961.

    The case is Shrinivas R Desai. Read a July 2013 report [PDF 434 KB]

  • Liberalization of Foreign Direct Investment Policy-2013 - A committee appointed by India’s government to re-examine the foreign direct investment policy made recommendations that were followed up by the Minister of Commerce & Industry.

    Read a July 2013 report [PDF 391 KB]

  • Long-term capital gain exemption prior to set off against long-term capital loss - The Madras High Court held that computation of capital gains is done first, and then provisions relating to set off of losses are next to be applied.

    The case is: Vijay M. Mahtaney. Read a July 2013 report [PDF 192 KB]

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