Set off of losses

This query is : Resolved

vipul Shah (Querist)
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21 August 2011 Mr X had discontiued business in PY09-10.
In that year he incurred a loss of Rs 3lacs which could not be set off against any income. Along with this there is c/f of loss of PY 06-07 of Rs 35000.
In PY 10-11 he recovered bad debts of Rs 40000.
My query is
1) Can he use recovery of bad debts for set off of loss pertaining to PY 09-10.
OR he can only used for set off of loss pertaining to year of discontiued business and c/f of loss can be set off againsr any other business profit.

Vivek Mehta (CA, DISA,CS, MBA)

Vivek Mehta (CA, DISA,CS, MBA) (Expert)
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21 August 2011 First of all bifurcate the losses in two parts...that is unabsorbed depreciation and the other as losses....and now see the situation....

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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22 August 2011 In my view , it is compulsory and recommended that the loss of AY 2007-08
should be first set off.
.
It is not so that the recovery belongs to a particular year can be set off against the loss of same year.
.
The loss can be set off against any other business income within the stipulated time limit of 8 AY.
.
I also agree with the expert's advise regarding bifurcation into Dep Loss and Bus Loss.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
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22 August 2011 I agree with the experts

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