BUSINESS INCOME AFTER F&O BUSINESS LOSS

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A company with both a services business and an F&O business experienced a significant F&O loss in FY 2019-20, despite strong turnover in its services. The query asks whether this F&O loss would be treated as speculative, preventing it from offsetting the taxable service income. The response clarifies that F&O business is generally non-speculative, meaning its profits and losses can be adjusted against other business income (PGBP).

Deepak

Deepak (Querist)
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14 October 2020 Company is having services business and F&O business. In past, sometime F&O business income exceeds services business income or sometimes f&O business happens loss. In FY 2019-20, company suffered F&O business huge loss and on the other side company also made good turnover in services business income and made resultant positive net profit. Becoz of the good services turnover, company is liable to pay income tax on service income and f&o business loss cannot be set off. It happens on many occasion in past that company made F&O business loss and the same was carried forward for set off and pay tax on net business profit where F&O business profit is more than services business income.
Please advice whether becoz of huge loss in F&O business will be treated as speculative loss instead of business loss and good turnover of service business income.
Thanks in advance.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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22 November 2020 please read section 43(5) of the income-tax act.

Deepak

Deepak (Querist)
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22 November 2020 What treatment should be done in aforesaid case In the light of section 43(5). Please help it out.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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31 October 2021 F&O business is not speculative business, but non-speculative business. & hence profit & loss from such business can be adjusted with other PGBP income.

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