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Instances of losses not deductible for business income

CA KULDEEP PRAJAPATI ROOPWAL , Last updated: 01 February 2014  
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1. Where the assesse, a retired partner of a firm, wrote off an amount owned by the firm to it several years after the dissolution of the firm, It was held that the amount so written off was not deductible  in computing the assessee’s income since the amount represented  capital contribution  to the firm as a result of which the assesse had become entitled to the share of profits and, that  if at all it was a loss, it was a capital loss.

2. Loss relating to any business or profession  discontinued before the commencement of previous year.

3. Loss suffered by the assesse firm doing business in distribution of films , of amount advanced by it to film producer for acquiring distribution right.

4. Anticipated future losses.

5. Loss of advance made for setting up a new business which ultimately  could not be started.

6. Depreciation of fund kept in foreign currency for capital purposes.

7. Loss arising from non recovery of tax paid by an agent on behalf of the non resident.

8. Loss incurred by assesse in encashment of cash certificate with bank prematurely for paying off of its debt to said  bank in order to reduce  quantum of bank interest.

9. Loss incurred due to  devaluation of indian rupee in respect of unremitted profits  earned in past on which income tax had already been levied.

10. Loss of security deposit made to obtain selling agency.

11. Where the assesse had constructed  a bridge over a river to facilitate laying of water pipes leading to its benefication plant and the said bridge was washed away in heavy floods, it was held that loss ensuing from the said floods was not a business loss.

12. Where a deposit was made by the assesse company with another company in connection with a leave and license agreement to work in a mill owned by the latter company, loss due to irrecoverability of deposit would be a capital loss and not a business loss.                                                                   

NOTE: THESE ARE DECISIONS OF VARIOUS COURTS & AUTHORITIES

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