Set off business loss
This query is : Open
28 July 2009
Hello Sir/Madam,
An assessee had no business income during the year. The general and administration expenses were shown by the company as business loss incurred during the year.
The business loss was set off against the house property income of the assessee during the year.
Is this correct.
Please reply with a case law if any
An assessee had no business income during the year. The general and administration expenses were shown by the company as business loss incurred during the year.
The business loss was set off against the house property income of the assessee during the year.
Is this correct.
Please reply with a case law if any
29 July 2009
As per sec 71
(1) Where in respect of any assessment year the net result of the computation under any head of income, other than Capital gains, is a loss and the assessee has no income under the head Capital gains, he shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head.
(2) Where in respect of any assessment year, the net result of the computation under any head of income, other than Capital gains, is a loss and the assessee has income assessable under the head Capital gains, such loss may, subject to the provisions of this Chapter, be set off against his income, if any, assessable for that assessment year under any head of income including the head Capital gains (whether relating to short-term capital assets or any other capital assets).
[(2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respect of any assessment year, the net result of the computation under the head Profits and gains of business or profession is a loss and the assessee has income assessable under the head Salaries, the assessee shall not be entitled to have such loss set off against such income.]
(3) Where in respect of any assessment year, the net result of the computation under the head Capital gains is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to have such loss set off against income under the other head.]
[(4) Where the net result of the computation under the head Income from house property is a loss, in respect of the assessment years commencing on the 1st day of April, 1995 and the 1st day of April, 1996, such loss shall be first set off under sub-sections (1) and (2) and thereafter the loss referred to in section 71A shall be set off in the relevant assessment year in accordance with the provisions of that section.]
Thus the treatment done by you is correct.
(1) Where in respect of any assessment year the net result of the computation under any head of income, other than Capital gains, is a loss and the assessee has no income under the head Capital gains, he shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head.
(2) Where in respect of any assessment year, the net result of the computation under any head of income, other than Capital gains, is a loss and the assessee has income assessable under the head Capital gains, such loss may, subject to the provisions of this Chapter, be set off against his income, if any, assessable for that assessment year under any head of income including the head Capital gains (whether relating to short-term capital assets or any other capital assets).
[(2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respect of any assessment year, the net result of the computation under the head Profits and gains of business or profession is a loss and the assessee has income assessable under the head Salaries, the assessee shall not be entitled to have such loss set off against such income.]
(3) Where in respect of any assessment year, the net result of the computation under the head Capital gains is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to have such loss set off against income under the other head.]
[(4) Where the net result of the computation under the head Income from house property is a loss, in respect of the assessment years commencing on the 1st day of April, 1995 and the 1st day of April, 1996, such loss shall be first set off under sub-sections (1) and (2) and thereafter the loss referred to in section 71A shall be set off in the relevant assessment year in accordance with the provisions of that section.]
Thus the treatment done by you is correct.
29 July 2009
Thank you for the reply
The set off of business loss with HP Income can be done.
But in the assessment of this company the ITO is questioning the existence of business loss itself as there is no business income during the year.As per him how can there be business loss on account of general and administrative expenses when there is no business income.
Is he correct. If not, any supportings?Please help
Regards,
Jyoti
The set off of business loss with HP Income can be done.
But in the assessment of this company the ITO is questioning the existence of business loss itself as there is no business income during the year.As per him how can there be business loss on account of general and administrative expenses when there is no business income.
Is he correct. If not, any supportings?Please help
Regards,
Jyoti
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