Section 115VM of Income Tax Act: Exclusion of loss Income Tax

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Amended and updated notes on section 115VM of Income Tax Act 1961 as amended by the Finance Act 2020 and Income-tax Rules, 1962. Detail discussion on provisions and rules related to exclusion of loss.

Chapter XIIG (Sections 115V to 115VZC) of the Income Tax Act 1961 deals with the provisions related to special provisions relating to income of shipping companies. Section 115VM of IT Act 1961-2020 provides for exclusion of loss.

Recently, we have discussed in detail section 115VL (general exclusion of deduction and set off, etc.) of IT Act 1961. Today, we learn the provisions of section 115VM of Income-tax Act 1961. The amended provision of section 115VM is effective for financial year 2020-21 relevant to the assessment year 2021-22.

In this article, you will learn detail of the provisions of section 115VM of the Income Tax Act, 1961 Bare Act read with the Income-tax Rules, 1962, regulations, notifications, circulars, orders and Press Release by CBDT, Income Tax Department and the Ministry of Law and Justice, Government of India.

Section-115VM: Exclusion of loss

Section 115VM(1) of Income Tax Act

Section 72 shall apply in respect of any losses that have accrued to a company before its option for tonnage tax scheme and which are attributable to its tonnage tax business, as if such losses had been set off against the relevant shipping income in any of the previous years when the company is under the tonnage tax scheme.

Section 115VM(2) of Income Tax Act

The losses referred to in sub-section (1) shall not be available for set off against any income other than relevant shipping income in any previous year beginning on or after the company exercises its option under section 115VP.

Section 115VM(3) of Income Tax Act

Any apportionment necessary to determine the losses referred to in sub-section (1) shall be made on a reasonable basis.

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