Option of Set off or carry forward

Dear Shikha,

YES, IT IS MANDORY TO SETOFF WITH THE CURRENT YEAR'S INCOME FIRST.

Set off planning is at the discretion of the assessee.

You have to compulsorily set off current year and brought forward losses against eligible incomes to the maximum extent in a year.

Only discretion available is that assessee can choose against which head, what, should be set off (according to the provisions of the act of course:p)

Thanks a lot.. But can you please specify the provision according to which it has to be mandatorily set off.. Even I feel that it has to be set off but don't know as per which section is it given?

Dear Shikha,

Sec 72 which deals with Carry forward of PGBP Losses, says that "so much of loss which couldnot be setoff as per sec 71 can be carried forwrd..........."

Sec 71 deals with the set off of losses.

amir is correct..............

agree with amir

Agree with Mr. Amir

Current year losses should be adjusted with available income before carry forwarding to next year.

 yes amir is right i agree with amir 

you cannot carry forward loss of business to next year if you have other income for set off 

you have to set off with it 

it can be carry forward in that situation when there is no other source of income is for set off under set off and carry forward provision then it's last option for carry forward

and as per section 72 of income tax act 1961 you can  carry forward and set off of business loss other than speculation loss 

• AS per sec 72 Buisness loss other than speculation loss , to the extent not set-off under sec.71, shall be carry frwd to the next AY and set-off against the income under the head PGBP of the next 8 AY
• It is not necessary that the loss should be set off against the PGBP of the business in relation to which the loss was incurred.

But Sec 72 says that previous year loss which could not be set off or which is not set off can be carried forward. Does this imply that it is at the option of the assesse to set off or carry forward??

Dear Shikha,

This will clear ur doubt

Assessee does not have any option - Section 72 provides for carry forward of loss only when such loss cannot be set off against income under any other head. Under the Act, there is no provision which give option to the assessee to show the profit as income from one source and carry forward the loss from another source of income to the next year - CIT v. Milling Trading Co. (P.) Ltd. [1994] 76 Taxman 389 (Guj.).