Page 106 - DCOM508_CORPORATE_TAX_PLANNING

Unit 4: Set-off and Carry Forward of Losses

Notes
Example 1: Mr. E has furnished his details for the A.Y. 2013-14 as under
Income from salaries 1, 50,000
Income from speculation business 60,000

Loss from non-speculation business (40,000)
Short-term capital gain 80,000
Long-term capital loss of A.Y. 2011-12 (30,000)
Winning from lotteries 20,000
In this case the taxable income of Mr. E for the A.Y. 2013-14 will be:

Income from salaries 1, 50,000
Income from speculation business 60,000
Less: Loss from non-speculation business (40,000) 20,000
Short-term capital gain 80,000

Winnings from lotteries 20,000
Taxable income 2, 70,000

Notes Long-term capital loss can be set off only against long-term capital gain. Therefore,
long-term capital loss of ` 30,000 has to be carried forward to the next assessment year.

Example 2: The details of Mr. F for the A.Y.2013-14 from the information given below for
which we need to compute the gross total income:
Net income from house property 1, 25,000
Income from business (before providing for depreciation) 1, 35,000
Short-term capital gains on sale of shares 56,000
Long-term capital loss from sale of property (brought forward from A.Y.2012-13) (90,000)
Income from tea business 1, 20,000
Dividends from Indian companies carrying on agricultural operations 80,000
Current year depreciation 26,000
Brought forward business loss (loss incurred six years ago) (45, 000)
From the above details the gross total income of Mr. F for the A.Y. 2013-14 is calculated as
under:
Income from house property 1, 25,000
Income from business
Profits before depreciation 1, 35,000

Less: Current year depreciation 26,000
Less: Brought forward business loss 45,000
64,000

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