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Exception 2- Loss from the activity of owning & maintaining race horses included in Other source head.
Exception 3 Loss from Specified business u/s 35AD (Sec. 73A) (Cold Chain, Warehousing, hotel, hospital etc.). Exception 4- Loss can not be set off against winning from lotteries, crossword, horse races etc.
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EXAMPLE
X has two businesses A & B. Profit From Business A Loss From Business B `. 500,000/`. 200,000/-
The Loss of `.200,000/- can be set off with his Profit of `.500,000/-. Therefore the amount taxable under the head Profit & Gains from Business will be (`.500,000`.200,000) `.300,000/-
EXCEPTIONS
Speculation Loss Cannot be set off against any other head.
Capital Loss - Cannot be set off against any other head except Capital Gains.
Loss from the activity of owning and maintaining race horses - Cannot be set off against any other head.
RULES
CARRY FORWARD AND SET OFF OF LOSS FROM HOUSE PROPERTY (SEC. 71B)
Loss can be carried forward for eight assessment years.
EXAMPLE
Income from House I 60,000 Loss from House II (30,000) NET INCOME 30,000
He has brought forward losses H1 (98-99) 30,000 H2 (2004-05) 35,000 98-99 H1 loss will be ignored.
EXAMPLE
X has two non speculative businesses A & B. Profit From Business A Loss From Business B Income from House property Besides he has income from house property. `. 70,000 `. 290,000. `. 510,000
The Net Loss from both businesses of `.220,000 (290,00070,000) can be set off with House Property income of `.510,000. Therefore the net income taxable is `.290,000/-
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3. 4.
Business Loss
Speculation Loss Capital Loss
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CARRY FORWARD OF BUSINESS LOSS OTHER THAN SPECULATION LOSS (SEC. 72)
Loss can be set off only against business income. Losses can be carried forward by the person who incurred the loss.
Return of loss
Period of Carry forward of 8 years, in following , carry forward timing would be indefinite
Unabsorbed depreciation Unabsorbed capital expenditure of scientific research Unabsorbed expenditure on family planning
1. Amalgamating to Amalgamated
2. Demerged to Resulting Company 3. Firm or Propriety Concern to Successor Company 4. Closely held Company to LLP
The company should continuous the business of amalgamating company for at least 5 years. (Old company should have been in business for 3 yr)
Any other conditions to be satisfied if require to ensure genuine amalgamation. In case of non-compliance later, amount set off to be considered as income of that year.
LOSS FROM THE ACTIVITY OF OWNING AND MAINTAINING RACE HORSE.. (SEC. 74A)
A person incurring loss from such activity means expensed for Maintaining the horses , where no stake money is there or Loss = (Maintenance Exp. - stake money ) Such loss could be CF and set off against the same income only , for the period up to 4 years. Participation in Race not mandatory. Loss from racing activity can be set off against Profit from sale of horses.
PROVISIONS IN BRIEF
Type of Loss to be carried forward to the next year(s) HOUSE PROPERTY LOSS SPECULATION LOSS NON SPECULATION BUSINESS LOSS: Unabsorbed Depreciation, Scientific Research & Family Planning Expenditure Other Business Losses ANY INCOME NO TIME LIMIT 8 YEARS Income against which carried forward loss can be set off in next year(s) INCOME FROM HOUSE PROPERTY SPECULATION PROFITS Years 8 YEARS. 4 YEARS.
8 YEARS
8 YEARS 4 YEARS
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