Page 101 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes Accordingly, both investment companies and banking companies would not be treated as carrying
on speculation business in cases where they purchase and sell shares of other companies.
For this purpose, an investment company means a company who’s Gross Total Income consists
mainly of income which is chargeable under the heads “Income from house property”, “Capital
gains” and “Income from the other sources”.

4.7.2 Carry Forward & Set-off of Losses by Specifi ed Businesses
(Section 73A)

While dealing with Carry forward & set off of losses by specified businesses following things

should be kept in mind:

1. Any loss computed in respect of the specified business referred to in section 35AD shall be
set off only against profits and gains, if any, of any other specifi ed business.

2. The unabsorbed loss, if any, will be carried forward for set off against profits and gains of

any specified business in the following assessment year and so on.
3. There is no time limit specified for carry forward and set-off and therefore, such loss can be

carried forward indefinitely for set-off against income from specifi ed business.

Notes The loss of an assessee claiming deduction under section 35AD in respect of a
specified business can be set-off against the profit of another specified business under

section 73A, irrespective of whether the latter is eligible for deduction under section 35AD.
An assessee can, therefore, set-off the losses of a hospital or hotel which begins to operate
after 1st April, 2010 and which is eligible for deduction under section 35AD, against the

profits of the existing business of operating a hospital (with at least 100 beds for patients)
or a hotel (of two-star or above category), even if the latter is not eligible for deduction
under section 35AD.
Self Assessment

Fill in the blanks:
18. The meaning of the expression ‘speculative transaction’ as defined in ……………

19. The loss in speculation business can be carried forward only for a maximum period of
…………….
20. Any loss computed in respect of the specified business referred to in ……………shall be set

off only against profits and gains, if any, of any other specifi ed business.
4.8 Section 74

Section 74 provides that where for any assessment year, the net result under the head ‘Capital
gains’ is short-term capital loss or long-term capital loss, the loss shall be carried forward to the
following assessment year to be set off in the following manner:
Where the loss so carried forward is a short-term capital loss, it shall be set off against any capital
gains, short-term or long-term, arising in that year.
(i) Where the loss so carried forward is a long-term capital loss, it shall be set off only against
long-term capital gain arising in that year.
(ii) Net loss under the head capital gains cannot be set off against income under any other
head.

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