Amendment of section 115UB.
38. In section 115UB of the Income-tax Act, in sub-section (2), with effect from the 1st day of April, 2020,––
(a) for clauses (i) and (ii), the following clauses shall be substituted, namely:––
‘(i) out of such loss, the loss arising to the investment fund as a result of the computation under the head “Profit and gains of business or profession”, if any, shall be,––
(a) allowed to be carried forward and it shall be set off by the investment fund in accordance with the provisions of Chapter VI; and
(b) ignored for the purposes of sub-section (1);
(ii) the loss other than the loss referred to in clause (i), if any, shall also be ignored for the purposes of sub-section (1), if such loss has arisen in respect of a unit which has not been held by the unit holder for a period of atleast twelve months.’;
(b) after sub-section (2), the following sub-section shall be inserted, namely:––
‘(2A) The loss other than the loss under the head “Profit and gains of business or profession”, if any, accumulated at the level of investment fund as on the 31st day of March, 2019, shall be,––
(i) deemed to be the loss of a unit holder who held the unit on the 31st day of March, 2019 in respect of the investments made by him in the investment fund, in the same manner as provided in sub-section (1); and
(ii) allowed to be carried forward by such unit holder for the remaining period calculated from the year in which the loss had occurred for the first time taking that year as the first year and shall be set off by him in accordance with the provisions of Chapter VI:
Provided that the loss so deemed under this sub-section shall not be available to the investment fund on or after the 1st day of April, 2019.’.
Notes on Clauses:
Clause 38 of the Bill seeks to amend section 115UB of the Income-tax Act relating to tax on income of investment fund and its unit holders.
Clauses (i) of sub-section (2) of said section, inter alia, provides that the loss of an investment fund for any previous year, being the net result of computation of total income of the investment fund, without giving effect to the exemption to income other than business income, under any head of income which cannot be or is not wholly set-off against income under any other head of income of the said previous year, shall be allowed to carry forward and set-off in accordance with the provisions of Chapter VI.
Clause (ii) of said sub-section provides that such loss shall not accrue or arise or received by the unit holder.
It is proposed to substitute the said sub-clauses so as to provide that,--
(i) the loss arising to the investment fund as a result of the computation under the head “Profit and gains of business or profession”, if any, shall be, allowed carry forward and set off in accordance with the provisions of Chapter VI; and such loss shall not accrue, or arise or received by the unit holder; and
(ii) the other loss, if any, shall not accrue, or arise or received by the unit holder, if such loss has arisen in respect of a unit which has not been held by the unit holder for a period of atleast twelve months.
It is further proposed to insert sub-section (2A) to the said section so as to provide that the loss other than the loss under the head “Profit and gains of business or profession”, if any, accumulated at the level of investment fund as on the 31st day of March, 2019, shall be deemed to be the loss of a unit holder who held the unit on that day in respect of the investments made by him in the investment fund and be allowed carry forward and set off for the remaining period calculated from the year in which it had occurred for the first time taking that year as the first year in accordance with the provisions of Chapter VI and that thereafter said loss shall not be available to the investment fund.
These amendments will take effect from the 1st April, 2020 and will, accordingly, apply in relation to the assessment year 2020- 2021 and subsequent assessment years.
