With reference to the Circular No. 29 dated 2nd October 2019 regarding clarification in respect of option under section 115BAA of the Income Tax Act, 1961 inserted through the Taxation Laws (Amendment) Ordinance 2019, wh

Allowability of brought forward loss on account of additional depreciation: As regards the allowability of brought forward loss on account of additional depreciation, it may be noted that clause (1) of sub-section (2) of the newly inserted section 115BAA of the Income Tax Act, 1961 provides that the total income shall be computed without claiming any deduction under clause (iia) of sub-section (1) of section 32 (additional depreciation), and clause (ii) of the said sub-section provides that the total income shall be computed without claiming set off of any loss carried forward from any earlier assessment year if the same is attributable, inter alia to additional depreciation. Therefore, a domestic company which would exercise option for availing benefit of lower tax rate under section 115BAA shall not be allowed to claim set off of any brought forward loss on account of additional depreciation for an Assessment Year for which the option has been exercised and for any subsequent Assessment Year. Further, as there is no time line within which option under section 115BAA can be exercised, it may be noted that a domestic company having brought forward losses on account of additional depreciation may, if it so desires, exercise the option after set off of the losses so accumulated.