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set off of business loss

lal (executive) (26 Points)

20 November 2010

Can Carry Forward Business Loss be set-off against current year long term Capital Gain from sale of part of its own land , by a Pvt. Ltd. company ?

regards,

lal

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18 Replies

CA PARAS BAFNA (Practising CA ) (33423 Points)
Replied 20 November 2010

Business Loss can not be set off against Long Term Capital Gains.

Any brought forward loss can be set off against profits of any business in the subsequent years (upto 8 years)

1 Like

Devendra (Chartered Accountant) (4775 Points)
Replied 20 November 2010

Current Year Business Loss can be set-off against Long Term Capital Gain.

RAKESH (Almost CA) (2199 Points)
Replied 20 November 2010

@ devendra the query is about carry forward loss to be set off in the current year.

As rightly pointed out by paras sir Carry forward business loss has to be set off against only the current year profit or subsequent profit and this set off facility can be availed for 8 subsequent year provided that the original return was filed within due date as specified in Section 139(1)

Devendra (Chartered Accountant) (4775 Points)
Replied 20 November 2010

Thanks for correcting me Rakesh.

Devendra (Chartered Accountant) (4775 Points)
Replied 20 November 2010

Yes Carry forward Business Loss cannot be set off against any other income head except business Income and Speculation Income.

Regards,

Devendra Kulkarni

swapnil (CA Final) (598 Points)
Replied 21 November 2010

devendra, 1} i think c/f non speculative businee loss can be set off against future any non - speculative business income only,

and 2} c/f speculative business loss can b set off against future speculative business income only,

note : even through d business is not existant at d time of set - off of that c/f business loss { non-speculative / speculative }

pls correct my statement, if i wronge,

CA PARAS BAFNA (Practising CA ) (33423 Points)
Replied 21 November 2010

Swapnil has noted correctly that even if business A is closed but the brought forward losses of it can be set off against business B , provided the profits or nature of the business is same (means Speculative / non speculative)

Further, c/f means -from this year we are carrying it forward to the next year. So in the next year, it should be termed as brought forward .........

One more thing , b/f non-speculation business loss can be set off against any other non speculative business of the current year, the income of which may be assessed under any other head of income.

Example of any other business income- Shares held by assessee as trading assets- dividend u/s 2(22)(e) (deemed dividend) on such shares would form part of business income. B/f Business loss can be set off against it.

Shivam gaur (Article assistant) (38 Points)
Replied 22 November 2010

i think that a simple aapproach to it can be taken

1. for current year loss:

The loss from non speculative business can be set-off against any income except salary.

2. for b/f loss:

The b/f loss from non-speculative business from previous years can be set off against non-speculative and speculative income only.

so to conclude we can say...........

a. that b/f loss can only be set-off against income from same head (including all sources of the head).

b. that the current year loss can be set-off from income of same head as well as other heads except salary.(including all sources of heads).

further all of the above explaination applies only for loss of NON-SPECULATIVE business only.

Regards

Dheeraj (Learner) (1100 Points)
Replied 22 November 2010

the loss of pgbp can be carried forward for 8 yrs only

and it can be set-off u/h pgbp only in subsequent yrs and under any head in current year except income from salary etc.

lal (executive) (26 Points)
Replied 22 November 2010

THANKS TO ALL OF YOU FOR PROMPT RESPONSE .

HOWEVER I FEEL :

" WHEN CURRENT YEAR CAPITAL GAIN CAN BE SET-OFF AGAINST CURRENT YEAR BUSINESS LOSS,THEN WHY NOT PREVIOUS YEAR CARRIED / BROUGHT FORWARD BUSINESS LOSS ALSO ?

WHEN BOTH ARE OF THE SIMILAR NATURE !

IS IT NOT A DISCRIMINATION & AGAINST THE PRINCIPLE OF NATURAL JUSTICE?

WHAT IS THE REMEDY FOR IT ?

REGARDS,

LAL

KIRAN SHINDE (CHARTERED ACCOUNTANT) (39 Points)
Replied 02 November 2011

Dear Sir,

If One has a Profession and Speculative Business too.

then can the speculative business loss can be setoff against the profession income.

Further, the Speculative business includes trading in F & O and Equity shares.

As per my Knowlegde goes I think the speculative loss cannot be set off against any other income.

But, One of my friend is of the opinion that the Speculative loss from trading in F & O can be set off against the Profession Income. and Speculative Loss from Trading in Equity shares can be setoff agaisnt only the speculative business income the subsequent years.

Hence, please if any body could clearify the matter. I have tried to find the answer but i could not.

It would be great help if any one has any refer to section or any material thing in support or against the above issue.

Thanking in Advance.

CA PARAS BAFNA (Practising CA ) (33423 Points)
Replied 02 November 2011

Please refer Section 43(5)(d) and its explanation given thereunder.

You may conclude that the transactions in F&O are eventhough highly speculative in nature yet the said transactions are not treated as of speculative in nature . Your friend's view seems to be correct in respect of speculative business transactions in the business of shares.

Speculation loss in Share Transaction can be set off only against speculative income.