should we set off b/f losses or CY losses first??

1304 views 9 replies

hi all

            should we set-off B/F losses or current year losses first ????????

pls help me

 

reg

AJAY SIMHA CWA-INTER STUDENT

Replies (9)
CYL

YA

How can u setoff when there is  loss in current year also, by the way if some exception is there then go for b/f loss first as they will be having less year left for set off than current year.

Hi Friendz,

Effect should be given to current years loss first.

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.).

Current depreciation must be deducted first - Current depreciation must be deducted first before deducting the unabsorbed carried forward business losses of earlier years. Such losses cannot be given preference over current depreciation in the matter of set off in computing an assessee’s income for any particular assessment year - CIT v. Mother India Refrigeration Industries (P.) Ltd./Hindustan Vacuum Glass Ltd. v. CIT [1985] 155 ITR 711 (SC)/CIT v. Jaipuria China Clay Mines (P.) Ltd. [1966] 59 ITR 555 (SC).

Partial set off and partial carry forward is not permissible - The section does not permit the assessee to have only a part of the loss to be set off against income from other heads and carry forward the balance. Such computation would be wholly artificial, contrary to accepted principles of accountancy and will not reflect the correct income of the assessee in any particular year - G. Atherton & Co. v. CIT 1989 Tax LR 13 (Cal.).

Current Year Loss

brought forward loss..as current year loss can be set-off later also...

 

actually...do the thing which best saves tax..lol

First we need to set off the current year loss from the profits earned, whether the said needs an adjustment of inter-head or inter-source.And if any profits remained further after setting off  the current year loss, then the carried forward losses need to be set off.

Dear Ajay,

    CYL must be set off first. The reasons for the same have been rightly said by Mr.Amir

Current Year Loss should be set off Firstly.

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