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                                                                          Circular No.   1.1   /2019
                                       Government of India
                                         Ministry of Finance
                                      Department of Revenue
                                    Central Board of Direct Taxes

                                               North-Block, New Delhi, dated the 19th of June, 2019

      Subject: Clarification regarding non-allowability of set-off of losses against the
      deemed income under section 115BBE of the Income-tax Act, 1961 prior to
      assessment-year 2017-18-reg.

             With effect from 01.04.2017, sub-section (2) of section 115BBE of the Income-tax
      Act, 1961 (Act) provides that where total income of an assessee includes any income
      referred to in section(s) 68/69j69A/69B/69Cj69D of the Act, no deduction in respect of any
      expenditure or allowance or set off of any loss shall be allowed to the assessee under any
      provisions of the Act in computing the income referred to in section 115BBE(1) of the Act.

      2.     In this regard, it has been brought to the notice of the Central Board of Direct Taxes
      (the Board) that in assessments prior to assessment year 2017-18, while some of the
      Assessing Officers have allowed set off of losses against the additions made by them under
      Section(s) 68/69j69A/69B/69C/69D, in some cases, set off of losses against the additions
      made under Section 115BBE(1) of the Act have not been allowed. As the amendment
      inserting the words 'or set off of any loss' is applicable with effect from pt of April, 2017 and
      applies from assessment year 2017-18 onwards, conflicting views have been taken by the
      Assessing Officers in assessments for years prior to assessment year 2017-18. The matter
      has been referred to the Board so that a consistent approach is adopted by the Assessing
      Officers while applying provision of section 115BBE in assessments for period prior to the
      assessment year 2017-18.






      3.   The Board has examined the matter. The Circular No. 3/2017 of the Board dated 20th
      January, 2017 which contains Explanatory notes to the provisions of the Finance Act, 2016,
      at para 46.2, regarding amendment made in section 115BBE(2) of the Act mentions that
      currently there is uncertainty on the issue of set-off of losses against income referred to in
      section 115BBE. It also further mentions that the pre-amended provision of section 115BBE
      of the Act did not convey the intention that losses shall not be allowed to be set-off against
      income referred to in section 115BBE of the Act and hence, the amendment was made vide
      the Finance Act, 2016.
....


       4.      Thus keeping the legislative intent behind amendment in section 115BBE(2) vide the
        Finance Act, 2016 to remove any ambiguity of interpretation, the Board is of the view that
       since the term 'or set off of any loss' was specifically inserted only vide the Finance Act
       2016, w.e.f. 01.04.2017, an assessee is entitled to claim set-off of loss against income
       determined under section 115BBE of the Act till the assessment year 2016-17.






       S.          The contents of this Circular may be circulated widely for information of all
       stakeholders and departmental officers. The pending assessments and litigations on this
       issue may be handled accordingly.

       6.      Hindi version to follow.

                                                                                     R~)\3
                                                                                      ala raleswanJR.
                                                                     Under Secretary (ITA.II), CBOT

       (F.No.22S/4S/2019-ITA.II)

       Copy to:-


          i.   PS to FM/OSD to FM/PS to MoS(F)/OSD to MoS(F)
         ii.   PS to Secretary (Revenue)
        iii.   Chairman, CBDT & All Members, CBDT
        iv.    All Pr.CCsIT/ Pr.DsGIT
         v.    All Joint Secretaries/CsIT, CBDT
        vi.    C&AG
       vii.    CIT (M&TP), Official Spokesperson of CBDT
       viii.   % Pro DGIT(Systems) for uploading on official website
        ix.    Addl.CIT (Database Cell) for uploading on the departmental website

                                                                                         -.sol-
                                                                                    (Rajarajeswari R.)
                                                                       Under Secretary-ITA.II, CBOT