Loss of Specified Business under Section 35AD  can be set off against income from specified business

  1. If loss not wholly setoff it is carried forward to next year
  2. In next year, also it can be set off against income of such specified business
  3. Balance if left can be carry forward for next year and so for infinite number of years
  4. Losses can be Setoff only if Return filed within due date of 139 (1) (New Amendment)

  Effect of Amendment

Earlier even if Return is filed late,still loss under 35AD Can be carry forward

Now as per Section 80,it is mandatory to file return within due date to  carry forward the loss

Due date is

  • 31 July(Normal Cases)
  • 30 Sep (Audit Cases)
  • 30 Nov (Transfer Pricing)

as per Section 139(!)

 

Example 1

What is the total income chargeable to tax for the A.Y.2016-17?

 

Particulars Amount
Loss from Specified Business 1 -50000
Profit from Specified Business 2 20000
Profit from Normal Busines 3 40000
Total profit earned 10000

-a-

PARTICULARS AMT
PGBP Income    
Profit from Normal Busines 3   40000
     
Loss from Speculative Business 1 -50000  
Add,    
Profit from Speculative Bsiness 2 20000  
Balance Loss Carry forward to next year -30000 0
     
Total PGBP Income   40000
     
Gross Total income   40000

Remaining loss of 30000 of AY 2016-17 can be carry forward till infinite number of years

-ea-

 

 

IMPORTANT

Section 35AD lists

certain businesses

and

the date from where business to be commenced to claim the deduction

However,Section 73 A list only business and does not specify their commencement date

 

Hence,

loss of Specified Business under Section 35AD + ELIGIBLE (Commenced business after Specified Date)

can be adusted with

Profit of Specified business

(even if later is not eligible for deduction)

EXAMPLE

An assessee can, therefore, set-off the losses of

a hospital or hotel which begins to operate after 1st April, 2010 and which is eligible for deduction under section 35AD,

against the profits of the existing business of operating a hospital (with atleast 100 beds for patients) or a hotel (of two- star or above category),

even if the latter is not eligible for deduction under section 35AD.

  1. Income Tax
  2. Set off and Carry Forward of Losses
Ask Download

About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
Jail