one of my client draws income from salary. he did not show some cash deposits done in bank from which he did business of futures and options. eventually he made a loss which he did not show in his tax return and thus such return was filed in salary ward within time limit as per sec 139. now due to AIR information, his cash deposits are caught by department and such undisclosed cash deposits are being added to his income. can he get set off of the loss made from share dealings from such undisclosed income even though the same is not shown in tax return?
25 February 2013
he has filed return of income within due date which is already mentioned in the query.. my point is that he has not shown the business loss as the income invested in such business was undisclosed
25 February 2013
But as you have not shown that source of income, it is considered as undisclosed income and it will not be allowed to be set-off in future.
25 February 2013
this means that the assessee will be hit in two ways.. 1.his undisclosed income caught will face addition and penalty and 2. his legitimate loss will also not be given to him.. i had the opinion that once his income is caught and treated as regular income, the result of application of such income should also be taken into account.. if such income would have resulted in profit, the dept will definitely tax such additional income.. thus any loss/profit from business done with such income should also be taken into account !!
26 February 2013
Assessee will get set-off for loss from business which was undisclosed, but only from that years Profits. But from your statement it is clear that your client have salary income only and business loss can not be set-off against salary income. And this loss can not be carried forward.
26 February 2013
okk.. thank you.. thus if i show the undisclosed income as commission income or income from some undisclosed business, then i can set off the share business loss from such undisclosed income !! two things will happen.. assessee earned money from some undisclosed income being his profit. such profit invested in other business where loss occurred. Thus net effect can be asked for in the addition..
07 May 2014
[2013] 39 taxmann.com 3 (Gujarat) HIGH COURT OF GUJARAT Commissioner of Income-tax - II v. Shilpa Dyeing & Printing Mills (P.) Ltd.* AKIL KURESHI AND MS. SONIA GOKANI, JJ. TAX APPEAL NO. 290 OF 2013 APRIL 4, 2013 Section 71, of read with sections 69 and 14, of the Income-tax Act, 1961 - Losses - Intra head set off [Set off against undisclosed income] - Whether for income declared in survey to be taxed, it has to fall under one of heads of income under section 14 and cannot be taxed separately - Held, yes - Whether, therefore current year loss can be set off against undisclosed income declared in survey - Held, yes [Para 10] [In favour of assessee]
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