466
June 29 To July 5, 2019 u Taxmann’s Corporate Professionals Today u Vol. 45 u 54assessee in computing the income referred
to in Section 115BBE.
The word ‘or set-off of any loss’ was inserted
by the Finance Act, 2016 in the section 115BBE.
As the amendment inserting the words was
applicable, w.e.f., 1-4-2017 and applies from
assessment year 2017-18 onwards, conflicting
views have been made by the AOs while
allowing set off of losses in assessments for
years prior to assessment year 2017-18.
Examining the matter, The CBDT has clar-
ified that an assessee can claim set-off of
loss against income determined under section
115BBE of the Act till the assessment year
2016-17.BDT issues direction to AO for C
making ‘Assessment of Firms’CIRCULAR NO. 12/2019, DATED 19-06-2019
In order to improve the quality of assessments
being framed in case of firms, the Central
Board of Direct Taxes (CBDT) has desired
that Assessing Officers (AO) should duly
take into consideration the following issues
while making assessments in case of firms:
(a) Interest on capital & remuneration paid
to partners shall be cross-verified from
the ROI of the partners to eliminate any
possibility of discrepancy.
(b) Interest on capital & remuneration shall
be allowed as per Section 40(b)(iv). De-
duction to be allowed if payment is in
accordance with terms of partnership
deed & paid for the period after the
date of partnership deed. Further the
amount of interest shall not exceed 12%
p.a. & remuneration shall not exceed
the maximum prescribed amounts.
(c) ‘Book Profit’ shall be computed for the
payment of remuneration to the working
partners and shall be the net profit for
the relevant previous year which shall
be increased by the remuneration paid
to partners. All incomes such as capitalgains, interest, rental income, income
from other sources, etc., which do not
fall under the head ‘Profit or gains
from business and profession’ should be
excluded while computing book profit.
(d) Non-compliance with provisions of sec-
tion 184 may result in disallowance
of expenses claimed by firm such as
remuneration, interest, etc, payable to
partners which are otherwise allowable
under this provision.
(e) AO should verify the claim of firm re-
garding carry forward & set off of losses
as per Sec. 78 and shall disallow the
claim in case of change of constitution
of firm or on succession.
The above recommendations would also apply
to limited scrutiny.Case Laws
c. 54 relief available even if sold Se
flat was constructed on land occu-
pied on housing society on lease-
hold basisPrincipal CIT v. Rahul Uday Tuljapurkar
[2019] 106 taxmann.com 66 (Bom.)
The assessee was a joint owner of a flat. The
flat complex was owned by a Co-operative
Housing Society on a piece of land which
was granted under a long-term lease. Assessee
sold his flat and invested a part of the sale
consideration for purchase of a new residential
unit. He claimed section 54 deduction while
computing his capital gain tax.
Assessing Officer (AO) rejected claim on the
ground that the assessee had not transferred
the building and the land appurtenant thereto.
The Bombay High Court held that what
is important to claim section 54 exemption
that there should be a transfer of capital
asset being a building or land appurtenant
thereto and being a residential house. TheWEEKLY REVIEW