Page 111 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes Restructuring: It is the corporate management term for the act of reorganising the legal, ownership,
operational, or other structures of a company for the purpose of making it more profi table, or
better organised for its present needs.
Set-off losses: Setting off losses against the income of the same year.

Unabsorbed depreciation: A company depreciates long-term assets to recover expenses it incurs
in operating activities and maintenance processes. Fiscal laws allow a firm to recover unabsorbed

depreciation over a number of years.
4.14 Review Questions

1. Define set-off and carry forward of losses.
2. Explain, in detail, the inter source adjustment as provided under Section 70.
3. What all points should be kept in mind while setting-off of losses against income under
another head?

4. Mention the basic rules governing set-off and carry forward of losses.
5. Discuss set-off and carry forward of losses from house property.
6. How can one set-off and carry forward of losses occurring from business?

7. Define group taxation.
8. Explain the set-off and carry forward of losses of accumulated business losses and
unabsorbed depreciation in case of amalgamation and demerger.
9. Write a note on losses in speculation business.

10. Describe set-off and carry forward of losses by specifi ed businesses.
11. What are capital losses? How are they set-off and carry forwarded?
12. M/s. JKLM, a firm, consists of four partners namely, J, K, L and M. They shared profi ts and

losses equally during the year ended 31.3.2012. The assessed business loss of the fi rm for
the assessment year 2012-13 which it is entitled to carry forward amounts to ` 3,60,000. A
new deed of partnership was executed among J, K, L and M on 1.4.2012 in terms of which

they agreed to share profits and losses in the ratio of 15:15:20:50 respectively. Compute the

amount of business loss relating to the assessment year 2012-13, which the firm is entitled
to set off against its business income for the assessment year 2013-14. The business income

of the firm for the assessment year 2013-14 is 3, 30,000. Your answer should be supported
by reasons.
13. An assessee sustained a loss under the head “Income from house property” in the previous
year relevant to the assessment year 2012-13, which could not be set off against income
from any other head in that assessment year. The assessee did not furnish the return of loss
within the time allowed under section 139(1) in respect of the relevant assessment year.
However, the assessee fi led the return within the time allowed under section 139(4). Can
the assessee carry forward such loss for set off against income from house property of the
assessment year 2013-14?
14. M, an individual, was carrying on a business as sole proprietor. On his death, his legal

heirs decide to continue the same business by forming a firm. At the time of death, M had a
determined business loss of ` 2 Lakhs, under the provisions of the Income-tax Act, 1961 to

be carried forward. Does the firm, consisting of all the legal heirs of M, get a right to have
this loss adjusted against its current income? Discuss.
15. Rajesh & Co., the sole proprietary concern of Mr. Rajesh got converted into partnership after
his death on 02.04.2012 by his two sons and the business of Rajesh & Co., was continued to

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