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Set Off, Carry Forward & Set off

Vineet Kumar Sharma (Chartered Accountant) (316 Points)

02 March 2010

Assume that I have a business loss & unabsorbed deprecaition in current year. I also have Business loss in last year too which is remain to be set off from current year. However, I have only such profit in House Property to set off :-

1. Business Profit & some of the unabsorbed depreciation.

2. Business Profit of Current Year & some of the last year unadjusted profit.

Please reply, whether option 1 is most appropriate or 2nd one.

Is there is another solution of above problem.

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3 Replies

C.Balaji (Learner) (1867 Points)
Replied 02 March 2010

Dear Vineet Kumar.........

According to me.....The Current Year losses should be set off against the income before adjusting the Carry forward loss........

But Unabsorbed depn will be set off after adjusting the Brought forward business loss..........

Waiting for other views/replies.........

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Vinit Agarwal (Audit Accounting and Taxation) (28 Points)
Replied 03 March 2010

Dear vineet

you are not allowed to set off LAST year business loss from any other head other than Profit and gain from business or profession, but u can set off your current year business loss from income from house property.

so first adjust your current year business loss from income from house property and balance if any after adjustment will be carry forward for 8 assesment year.

As per supreme court ruling in the case of JAIPURIA CHINA CLAY MINE unabsorbed depreciation is treated as current year loss and can br carried forward for indefinite period, so it is better to adjust it after adjusting business loss.