Can B/f Loss be setoff in parts?

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I had this query for the purpose of Tax Planning.

Assume I am an Indivisual with no other income.

Supposing i am having a b/f business loss of Rs.300000 from AY 10-11

Now I am having business income of Rs.320000 in AY 11-12.

Can I setoff only Rs.160000 from the B/f Loss so that my income for AY 11-12 stands at Rs.160000 (320000-160000) (min. exemption limit) and let the remaining Rs.140000 (300000-160000) be carried forward to future AYs. (since there is no further benefit in setting off ie. from tax angle)

Is this kind of adjustment allowed? If yes, then is it recommended?

Replies (7)

Athmaram

Articled Assistant

184 Points Posted on 09 April 2011

No Mr.Vishal

If ur Business profit for the AY 2011-12 is Rs.3,20,000 then u have to set off the entire cf business loss of Rs.3,00,000 in the Ay 2011-12. Your business income for the AY 2011-12 will be Rs.20,000(3,20,000-3,00,000). Which is less than the basic exemption limit of Rs.1,60,000/- ur tax liability will be. Rs.Nil.

Thanks & Regards

Ram.

U S Sharma

glidor@gmail.com

21670 Points Posted on 09 April 2011

you have to set off the carried forward loss in any year but when profit is available for doing so, not later than 8 years,

if your profit is not sufficient in next enough to set the loss fully in next year, you have to carry forward the "balance" to 2nd next year. but if you r next year income is more than the loss, than you have to adjust it fully in one go.

Guest

Posted on 09 April 2011

Originally posted by : U S Sharma
	you have to set off the carried forward loss in any year but when profit is available for doing so, not later than 8 years, if your profit is not sufficient in next enough to set the loss fully in next year, you have to carry forward the "balance" to 2nd next year. but if you r next year income is more than the loss, than you have to adjust it fully in one go.

CA AMANPREET SINGH

Chartered Accountant

245 Points Posted on 09 April 2011

if profits are available and you don't setoff the losses, then you can't even carry it forward

SIDHARTH DHIR

senior articled assistant

607 Points Posted on 10 April 2011

Originally posted by : U S Sharma
	you have to set off the carried forward loss in any year but when profit is available for doing so, not later than 8 years, if your profit is not sufficient in next enough to set the loss fully in next year, you have to carry forward the "balance" to 2nd next year. but if you r next year income is more than the loss, than you have to adjust it fully in one go.