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Set off of loss from Casual Income

11 March 2010

Hello Friends !!

Is Set off of Non- Speculative Business loss allowed from Casual Income i.e Winning from Lotteries, Crossword, Puzzles etc?

Different teachers has different opinions regarding this matter..... Plz give the correct answer and also quote the section in support of your answer...

I am really very confused friends... Plz help !

waiting 4 ur reply...

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10 Replies

C.Balaji (Learner) (1867 Points)
Replied 11 March 2010

Dear Piyush.....

Non-speculative Business loss can be set off against any head of income except Salary......

But Please remember NO Loss can be set off against Casual Income......Similarly Casual loss can neither be set off nor carried forward.....

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Piyush Sanghi (CA) (172 Points)
Replied 11 March 2010

Thanx Mr. C. Balaji for ur valuable answer....

Please quote the section which section states that "NO Loss can be set off against Casual Income"??

Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 11 March 2010

As per Section 115 BB [Tax on winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever. 115BB. Where the total income of an assessee includes any income by way of winnings from any lottery or crossword puzzle or race including horse race (not being income from the activity of owning and maintaining race horses) or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, the income-tax payable shall be the aggregate of— (i) the amount of income-tax calculated on income by way of winnings from such lottery or crossword puzzle or race including horse race or card game and other game of any sort or from gambling or betting of any form or nature whatsoever, at the rate of 19[thirty] per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). Explanation.—For the purposes of this section, “horse race” shall have the same meaning as in section 74A.] Since it is taxed directly no set off available.

Max Payne (employed) (2574 Points)
Replied 11 March 2010

Hi Piyush,

It is a really good question.

You can see section 58(4), no deduction for any expenditure or allowance will be allowed for earning casual incomes of the nature u have referred.

"Is SET-OFF an allowance?"

I dont think it is technically an allowance, so there should be no restriction on set off...

But dept always thinks one step ahead, just download the e-return facility from income tax website, and try filling up the cells... Will the business loss be set off against the income from casual sources?

Same anomaly in law for unabsorbed depreciation vs salary... same solution...

there could be a gap in law, but the intent is clear thru the return preparing software....

Plus the taxation is direct like aditya sir pointed out...

2 Like

Piyush Sanghi (CA) (172 Points)
Replied 11 March 2010

I appreciate your answer "Mr. Ordiarily Resident Evil"......thanx a lot...!!

I understand Mr. Aditya Maheshwari that casual income is chargeble @ 30% but this doesn't mean that Non speculative business loss can't be set off from casual income. Thnx...

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nilesh dube (Service ) (74 Points)
Replied 12 March 2010

Dear Piyush, Sec 71 contains the provisions relating to set off of loss from one head against income from anothe head. Sec 71 does not contain anything like, losses can not be set off against winning from lotteries etc. But Sec 58(4) makes certain restrictions at the time of computing the income by way of any winning from lotteries, crossworld puzzles etc.As per sec 58(4) no deductions in respect of any expenditure or allowances in connection with such income shall be allowed under any provisions of this act. Also As per sec 115BB such income is chargeable to tax at a flat rate of 30%.And at the time of computing tax on total income such income is separately taxed at the rate of 30% and even no deduction under chap VI is allowed against such income. So it is very clear after reading sec 58(4) and sec 115BB that Law wants to tax such income at a flat rate of 30% only. The intention behind this is that government doesn not promote such kind of activities as such activities are totally dependent on luck and likelihood of losing is very high. so any income from these source is fully taxable irrespective of the any loss sustained by the assessee even from the same source or from any other head.

Prasanth Nair V (ACA,ACS,CWA Final,Mcom) (557 Points)
Replied 12 March 2010

hi..piyush Non Speculation Loss can be set off agianst any heads of income except 1. Salaries 2. Casual Income 3.House Property Income. Dont Hear others views, Just Follow Income Tax Act.

Mayank kharbanda (Risk Advisory Services) (409 Points)
Replied 12 March 2010

Originally posted by : Prasanth Nair V
	hi..piyush Non Speculation Loss can be set off agianst any heads of income except 1. Salaries 2. Casual Income 3.House Property Income. Dont Hear others views, Just Follow Income Tax Act.

ur first 2 points r correct but loss from non-speculation business can bet set off against house property income....

Rajat Singhal CA,CS,CFA (Senior Manager (F&A)) (254 Points)
Replied 12 March 2010

Hello Prashant, Can you just refer the section or something where you had find that business losses cannot be setoff against the house property income. Please share the same, i desperately wanted to know about this coz this is totally new for me.

sandesh (Accountant) (55 Points)
Replied 12 March 2010

Hello Prasanth & Mayank U/S 71/72 Loss from Business or Profession (other than speculation) can be set off against Business Income or any other head ( other than salaries) in same assessment year & only Business income in subsequent assessmet year. it can be carried forward for 8 years. will you please mention under which section loss from non speculatin bussiness cannot be set off against Casual income and income from house property.