Set off & carry forward of losses

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vijay arora (Querist)
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27 October 2013 Can any one say what is the order of set off of losses in case of PGBP in the following example?
Suppose, Mr. Vijay has two business.
A) Chemical business B) Textile business. From business A he has profit and from business B he has loss in the current financial year and also he has b/f losses of last previous year from the same business B.
What is the order of priority?

Nikhil Kaushik

Nikhil Kaushik (Expert)
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27 October 2013 First you set off the current year losses. Then you set off earlier losses against the remaining income of the current year.

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CA Pallav Singhania

CA Pallav Singhania (Expert)
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27 October 2013

Priority for set off of depreciation, business loss may be in the following order:

Current Year Loss

Current Year’s Depreciation

Unabsorbed Business Loss

Unabsorbed Depreciation

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vijay arora

vijay arora (Querist)
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28 October 2013 Dear Sir, Is it not advisable to set off previous year loss first in case of deficit of profit to cover the loss of current year and therefore current year loss may be c/f and benefit of one more assessment year would be there.????

Nikhil Kaushik

Nikhil Kaushik (Expert)
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28 October 2013 Vijay, it is not about what is advisable or not. Even your tax return form won't allow you to set off previous year losses first.

Remember, in the tax computation, the income of all the businesses under PGBP is clubbed together without any distinction to profit or gains. So the set off happens automatically.

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CA Pallav Singhania

CA Pallav Singhania (Expert)
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28 October 2013 Vijay I got your Point but if you do so, then the entire law will change...

As the business loss {non-speculation} is allowed to carry forward for a period of 8 years...

LIFO isn't possible in this case...

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