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

Under section 58 of the Income-tax Act, 2025, an eligible assessee opting for presumptive computation under Sl. No. 1 claims depreciation of Rs. 40,000 on machinery and has a brought-forward business loss. Which statement is correct?

Neither the depreciation nor the brought-forward loss can be set against presumptive income, since sub-section (4) disallows any loss, allowance or deduction. However, the written down value of the asset is still computed as if depreciation had been allowed each year.

  1. ADepreciation is allowed, but the brought-forward loss is not
  2. BBoth depreciation and brought-forward loss are allowed against the presumptive income
  3. CNeither is allowed against the presumptive income, though WDV is computed as if depreciation had been allowedCorrect
  4. DBrought-forward loss is allowed, but depreciation is not

Explanation

Section 58(4) bars any loss, allowance or deduction against the income computed presumptively. Section 58(6) however requires WDV of assets to be computed as if depreciation had been claimed and allowed for each relevant year.

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