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CMA Intermediate · Direct and Indirect Taxation · Income from House Property

Mr. Arvind incurred a house property loss of Rs 90,000 in Tax Year 1. It was carried forward in full. In Tax Year 2 he has house property income of Rs 30,000 and in Tax Year 3 he has house property income of Rs 25,000, with no other house property loss arising. The Tax Year 2 current house property income is positive. What loss remains to be carried forward after Tax Year 3, and what is the position of the loss under the time limit?

Rs 35,000 remains after Tax Year 3 (90,000 less 30,000 less 25,000). It can be carried forward only up to eight tax years immediately succeeding Tax Year 1, the year the loss was first computed. The period does not restart and is not four years.

  1. ARs 35,000; it can continue up to eight tax years after Tax Year 1Correct
  2. BRs 35,000; the time limit restarts from Tax Year 3
  3. CRs 60,000; it can continue up to eight tax years after Tax Year 1
  4. DRs 35,000; it lapses after four tax years after Tax Year 1

Explanation

Set off in Tax Year 2 is Rs 30,000, leaving Rs 60,000. Set off in Tax Year 3 is Rs 25,000, leaving Rs 35,000. Section 110(2) counts the eight years from the tax year the loss was first computed, so the period does not restart.

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