Set off, or carry forward and set off - Budget 2022

[CS Swati Dodhi]

Set off, or carry forward and set off - Set off of loss in search cases - Amendment in the provisions of section 79A of the Act

In Sections 70-80 of the Act there are provisions relating to set off or carry forward and set off of losses while computing the income under various heads and with respect to different classes of persons.  

As in some cases, assessees claim set off of losses or unabsorbed  depreciation, against undisclosed income corresponding to difference in stock, undervaluation of stock, unaccounted cash payment etc. as detected during the course of search or survey proceedings.

There is no provision in the Act so far to disallow such set-off and no distinction is made between undisclosed income which was detected owing to search & seizure or survey or requisition proceedings and income assessed in scrutiny assessment in the regular course of assessment though  for incomes falling in section 68, section 69, section 69B etc., such restriction is there.  

Therefore, it is proposed to insert a new section 79A wherein in furtherace to a search initiated u/s 132 or a requisition u/s 132A or a survey conducted u/s 133A, other than under sub-section (2A) of section 133A, the total income of any previous year of an assessee includes any undisclosed income, no set  off against such undisclosed income, of any loss, whether brought forward or otherwise, or unabsorbed depreciation under sub-section (2) of section 32 shall be allowed to the assessee under any provision of this Act in computing his total income for such previous year.

This amendment will take effect from 1st April, 2022 and will apply in relation to the assessment year 2022-23 and subsequent assessment years.