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(1) In current year business loss can be set off against any business [whether Normal or speculative]

Example 

Income from Speculative Business=50000

Loss from Normal Business=10000

These 2 can be adjusted and Net Income form Speculative business=4000

(2) It can be adjusted against any other income

     [Except salary income]

(3) Balance can be carry forward for adjustment in next year for maximum 8 years 

(4) In next year it can be adjusted against Business income only

 

 

Q1

PARTICULARS AMT
Income from salary 350000
Income from house property 150000
Income(Loss) from business – non-speculative -500000
Income from business  2– non-speculative 100000
Income from speculative business 200000
Total 300000

-a-

 

Business loss of -500000 can be adjusted against all Incomes except Income from Salary

 

PARTICULARS AMT
Income from salary (Net)   350000
     
Income from house property 150000  
Less    
Adjust with Business Loss non speculative 150000 0
     
     
PGBP Income    
Income from business  2– non-speculative 100000  
Less    
Adjust with Business Loss non speculative 100000 0
     
     
Income from speculative business 200000  
Less    
Adjust with Business Loss non speculative 200000 0
     
GROSS TOTAL INCOME   350000

 

Loss available after Set off=

-500000+100000+200000+150000=50000

This can be carry forward till next 8 years but in next year it can be adjusted with Business Income only

-ea-

 

Other Points

(5) Even if business discontinued still loss can be carry forward and adjusted against other Business Income

(6) Loss is allowed to same person who incurred the loss except in following cases.

  CASE

LOSS INCURRED BY

LOSS CARRY FORWARD BY

Inheritance  

Person (individual )   

Son [inheritor] He can carry forward for remaining 8 years   

Amalgamation of company

Amalgamating company

Amalgamated Co [Provision of section 72 A / 72 AA to be complied ]

Amalgamation  of Cooperative bank

Amalgamating cooperative bank 

Amalgamated cooperative bank  [Provision of section 72 AB  to be  complied ]

 Succession of partnership / proprietorship, in to company

Partnership / proprietorship

Company [provision of section 47(xiii) and 47(xiv) to be complied

Succession of  private co/ unlisted public LTD co, in to LLP 

PVT LTD/ Unlisted public LTD

LLP

 Demerger of company

Demerged co.

Resulting co.
[conditions specified by central govt. to be fulfilled]

Demerger of cooperative bank

Demerged cooperative bank

Resulting
 cooperative bank

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