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CMA Intermediate · Direct and Indirect Taxation · Profits and Gains of Business or Profession

Under Schedule X, where the Site Restoration Fund deduction is computed, how is it treated relative to brought forward losses?

The deduction is allowed before set off of brought forward losses from earlier tax years. Schedule X expressly gives the site restoration deduction priority, so it is computed first and the brought forward loss is then set off against the remaining income.

  1. AIt is allowed after set off of brought forward losses
  2. BIt is allowed before allowing set off of loss brought forward from earlier tax yearsCorrect
  3. CIt is not allowed if there is any brought forward loss
  4. DIt is allowed only in the year the loss is set off

Explanation

Paragraph 1(2) states that the deduction is allowed before set off of losses brought forward from earlier tax years under section 112. Hence brought forward losses do not reduce the profits base ahead of the deduction, and the deduction is not denied because of such losses.

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