Set off & Carry Forward and set off

 

Please have the patience to go through the following situation and confirm whether the computation of income made is properly made as per provisions of the Income Tax Act or there is any discrepancy? One special point i wanna know is whether Depreciation of Non-Speculative business of the current year can be set off against any income from Non-Speculative Source or from any other head of income (other than Salary Income) in the current year?

AY 2009/10

Details:

Salary Income                                                                                                    10000

Speculative Business Loss (including depreciation Rs.500)                  (1500)

Non-Speculative Business Loss (including depreciation Rs.300)           (800)

Non-Speculative Profit                                                                                          700

 

Computation of Taxable income for AY 2009/10

Salary Income                                                                                                               10000

Non Speculative Profit                                                                   700

Less: Depreciative in respect of Non-Spec Business           300

          Depreciation in respect of Spec Business                    400             Nil

 

Taxable Income                AY 2009/10                                                                         10000

 

Details of Loss Carried Forward to AY 2010/11:

Speculative Business

-          Loss                                               Rs.1000

-          Depreciation                                   Rs. 100

Non – Speculative Business – Loss                     Rs.500

 

AY 2010/11

Details:

Salary                                                                                                                    10000

Speculative Business Income                                                                           1000

Non-Speculative Business Income                                                                    560

 

Computation of Taxable income for AY 2010/11

Salary Income                                                                                                    10000

Speculative Business Income                                                     1000

Less: Brought Forward Speculative Loss                                 1000            Nil

Non-Speculative Business Income                                             560

Less: Brought Forward Non-Speculative Loss                         500

          Unabsorbed Speculative                                                        60            Nil

 

Taxable Income                AY 2010/11                                                                         10000

 

Details of Loss Carried Forward to AY 2011/12:

Unabsorbed Depreciation (Speculative)                                Rs. 40

Replies (1)

Dear Ajay,

The issue regarding setting off of Unabsorbed Depreciation with Salary has been debated n no. of times.........

some says it cannot well other says it can be set off.......I think it cannot be setoff

this is also one of same kind Whether "unabsorbed depreciation" sustained under speculative business can be setoff or not with the Profits of Non speculative business...........my view is it CANNOT.......therefore the above computation is not correct.......

 

Yes about depreciation of Non speculative business u r rite.........................

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