Set-off of capital losses

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Vivek Gala (Querist)

29 November 2011 There is a Capital gains arising of Rs. 30 crores.
There is a business loss of Rs. 20 crores in the same year.
There is also a carried forward Loss under the head Capital Gains of Rs. 20 crores.

How will the Capital gains be treated?

Thanking in advance!

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

29 November 2011 First, Set off of current year's business loss will be done against Capital Gains income of the same year.

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In case the loss b/fd is Long Term Capital Loss, it can be set off only if the remaining loss of current year is also LTCG.
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The Balance capital loss pertaing to the preceding AY, of Rs 10 Cr has to be c/fd to the next year.

Vivek Gala

Vivek Gala (Querist)

29 November 2011 Also If you could quote some case laws to which I can refer and understand better?

Vivek Gala

Vivek Gala (Querist)

29 November 2011 Can I first set off the b/f Losses under the head capital gains and carry forward my current year Business Loss in the next year???

I say this , As per S. 71 (2), "The loss under Capital Gains 'MAY' be set off against his income"

So can't this be interpreted as 'the Assessee's discretion if he wants to set off the b/f losses under the head capital gains first, and then the current year's business losses' ?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)

13 December 2011 It is advisable to first set-off brought forward loss under capital gain against income under the head capital gain.

Thereafter current year business loss can be set off under the remaining capital gain.

The business loss to the extent not set-off will be carried forward.

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