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If in a particular year the negative income is more than positive income, rest of the negative income may be set-off in subsequent years, such is known as carry forward of losses. If the net result in respect of any source falling under any head of income is loss, the assessee is entitled to have the amount of such loss set-off against his income from any other source under the same head.
If in a particular year the negative income is more than positive income, rest of the negative income may be set-off in subsequent years, such is known as carry forward of losses. If the net result in respect of any source falling under any head of income is loss, the assessee is entitled to have the amount of such loss set-off against his income from any other source under the same head.
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If in a particular year the negative income is more than positive income, rest of the negative income may be set-off in subsequent years, such is known as carry forward of losses. If the net result in respect of any source falling under any head of income is loss, the assessee is entitled to have the amount of such loss set-off against his income from any other source under the same head.
Droits d'auteur :
Attribution Non-Commercial (BY-NC)
Formats disponibles
Téléchargez comme PPTX, PDF, TXT ou lisez en ligne sur Scribd
positive incomes is known as set-off of losses. If in a particular year the negative income is more than positive income, rest of the negative income may be set-off in subsequent years, such is known as carry forward of losses. SET-OFF OF LOSSES • (1.)Set-off of loss from one source against income from another source under the same head of income(sec. 70):- Acc. To Sec.70 if the net result in respect of any source falling under any head of income is loss, the assessee is entitled to have the amount of such loss (excluding long term capital loss) set-off against his income from any other source under the same head. This is also known as intra-head adjustments. Except the following losses, other losses can be set-off against the other income of the same head—
• (a) Long term capital loss can be set-off
against long term capital gains. • (b) Speculation losses can be set-off against the profits from speculation business only. • (c) Losses of race horses can be set-off against the profits of race horses. • (d) Losses of lottery, cross-word puzzles, gambling and betting cannot be set-off against any income. • (e) Loss from an exempted source of income cannot be set-off against any taxable income • (2.)Set off of loss of one head of income against the income from other heads- • If the loss could not be set-off fully or partially from the same head (Section 70), then the remaining losses can be set- off from other heads of incomes according to Section 71 of Income Tax Act . Except the following losses, the loss under one head can be set off against the income of other heads-
• (i) Losses mentioned at (1) above.
• (ii) Loss under the head ‘capital gains’ cannot be set-off against the income from any other head. • (iii) Loss under the head ‘Profits of Business or Profession’ cannot be set-off against the, taxable income under the head ‘Salaries’. • CARRY FORWARD AND SET OFF OF LOSSES • The following rules apply regarding carry forward and set of off losses- • Loss Method of Set off Time 1. Business Against Income from limit 8 years 2. Loss Speculation Business or Profits 4 years Speculation 3 lossesterm Profession Short only against capital 8 years Only capital loss gains To be cont……… Loss Method of Set off Time 4. Long term Only against long term limit 8 years 5. capital loss Loss from capital gains income Only against 8 years 6. houseof race Loss from house Only againstproperty income 4 years 7. property horses Loss of Firm from race horses Firm itself will set off As per rules. Note- • (1.) From the assessment year 2000-01 the losses of discontinued business can also be set off provided the prescribed period of 8/4 years have not passed from the year in which the loss was computed. • (2.) The provisions regarding carry forward and set off of loss from assessment year 1999- 2000. • (3.) Unabsorbed depreciation of any assessment year or years preceding to the assessment year 2002-2003 can be set off against any source of income in assessment year 2002-2003. The balance of unabsorbed depreciation can be set off in the following assessment years against any other head of income (but excluding the income under the head salaries), provided there is no income or • (5.) From the assessment year 2001- 02 the unabsorbed depreciation of discontinued business can also be set off.