SET-OFF OF LOSSES

This query is : Resolved

Priyanka Tanna (Querist)
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26 July 2010 In case an assessee has b/f business losses and he has losses in the current year 2..but he has income from other business and other sources.so can he 1st set-off his b/f business losses and then the current years' losses?????? This will reduce the tax liability.....

Aditya Maheshwari

Aditya Maheshwari (Expert)
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26 July 2010 Loss can be set off against income from any business - The conditions in proviso (i) of section 72(1) requiring continuation of the carrying on of the same business by the assessee do not provide that the unabsorbed loss shall be set off against income from the same business. If the assessee continues to do the same business, then carried forward unabsorbed loss may be set off against the income of the assessee against any business - Smt. Tara Devi Behl v. CIT [1996] 218 ITR 541/86 Taxman 342 (Punj. & Har.).

SO u can set off loss from one business against other business.

However u cannot set off c/f business loss from other sources income. It can be set off against business income only.

CA. Pradeep Nayak

CA. Pradeep Nayak (Expert)
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26 July 2010 In addition to what Mr. Maheshwari mentioned above, current year loss should be set off first against current year income. Only if there is any surplus, you can set off the B/F loss.

You cannot setoff B/F loss first before setting off current year loss.

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Aditya Maheshwari

Aditya Maheshwari (Expert)
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26 July 2010 Yes correctly pointed out by Pradeep. Missed that point in the query.

First current year loss to be set off and then b/f losses.

Priyanka Tanna

Priyanka Tanna (Querist)
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21 August 2010 Thanks Guys...it ws urgent.....m gettin ur reply later....but neway,i did the same thng wot u both said...so m happy!!!