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F&O Loss and LLP Remuneration

Rachit Sharma (Intern) (29 Points)

20 March 2021  

Dear Sirs,

My Query is :-

Mr. A is partner in a LLP firm and gets Remuneration and Interest on Capital from there.

He also did few F&O Trading (Non-speculative income) this financial year and suffered a loss of INR 25 Lakhs.

I want to know that, Is it possible his F&O trading (Non-speculative income) loss can be set off from the Remuneration & interest on capital received from his LLP firm?

I hope you can help me out and him?


 8 Replies

Sourav (Student) (23831 Points)
Replied 20 March 2021

No you cannot set off F&O loss against remuneration and interest on capital. It's not possible

Rachit Sharma (Intern) (29 Points)
Replied 20 March 2021

I believe F&O Trading loss is a Non-speculative losses can be set-off against any other business income except salary income the same year. So they can be set-off against bank interest income, rental income, capital gains, but only in the same year

And the receipt of remuneration or interest or remuneration and interest is being taxed as business income in the hands of LLP partner. 

So I guess Business income can be used to set-off F&O loss.

Sourav (Student) (23831 Points)
Replied 20 March 2021

Yes you can set off F&O loss against business income but not from remuneration and interest on capital

Rachit Sharma (Intern) (29 Points)
Replied 20 March 2021

The Remuneration to Partners LLP paid to the partners is treated as an expense in the books of LLP and (TDS) Tax is not required to be deducted by a firm from remuneration payable to the partners, because For deduction of tax from salary under Section 192 of the Income Tax Act, 1961, employer-employee relationship must exist.

Secondly, Section 15 of the Income Tax Act, 1961 states that, any salary, bonus, commission or remuneration, by whatever name called, due to or, received by a partner of a firm from the firm shall not be regarded as “Salary”. The remuneration paid to partners of a firm is taxable in the hands of receiving partner as business income under Section 28 of the Income Tax Act, 1961

So I believe it is business income. 

Spurto Consultancy Services (Consultant) (1891 Points)
Replied 20 March 2021

As per our opinion, the loss can be set off with remuneration and interest from LLP because both are business income and F&O loss being Non Speculative

1 Like

Rachit Sharma (Intern) (29 Points)
Replied 20 March 2021

Originally posted by : Spurto Consultancy Services
As per our opinion, the loss can be set off with remuneration and interest from LLP because both are business income and F&O loss being Non Speculative

Thank you! 

But what about un-adjusted F&O losses, if it remains. I believe it can be carry forward to 8 years. Is that correct? And can we set-off them against business income in remaining years?

Rachit Sharma (Intern) (29 Points)
Replied 21 March 2021

Dear all, Is there any chance to get an answer on this?

Spurto Consultancy Services (Consultant) (1891 Points)
Replied 22 March 2021

Yes you can set off the carry forward loss with next year business income


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