Set-off of losses not permissible against unexplained income, investments, money etc. chargeable under sections 68/69/69A/69B/69C/69D [Section 115BBE]

Effective from: A.Y.2017-18

(i) Under section 115BBE, unexplained cash credits under section 68, unexplained investments under section 69, unexplained money under section 69A, undisclosed investments under section 69B, unexplained expenditure under section 69C and amount borrowed or repaid on hundi under section 69D are taxable at the rate of 30%.

(ii) Further, no deduction in respect of any expenditure or allowance in relation to income referred to in the said sections shall be allowable under any provision of the Income-tax Act, 1961.

(iii) However, there is no specific provision prohibiting set-off of losses against income referred in section 115BBE. This issue was, therefore, the subject matter of litigation, and many Courts have taken a view that losses shall not be allowed to be set-off against income referred to in section 115BBE.

(iv) In order to avoid further litigation and clarify the real intent of law, section 115BBE(2) has been amended to expressly provide that no set off of any loss shall be allowable against income brought to tax under sections 68 or section 69 or section 69A or section 69B or section 69C or section 69D.