Set
off and Carry forward of Losses Problems and Solutions
Income
Tax Solved Practical Problems
1. Mr. Aditya, a resident individual, submits the following information relevant to the Previous Year ending 31st March, 2020: DU 2020
|
Particulars |
Amount
(Rs.) |
|
1. Income from Salary
(computed) 2. Income from House Property: (i) House I (ii) House II (iii) House III (self-occupied) 3. Profit and Gains of
Business or Profession: (i) Business I (ii) Business II (iii) Business III (speculative) (iv) Business IV (speculative) 4. Capital Gains: (i) Short-term capital loss (ii) Long-term capital gains on transfer of shares 5. Income from Other Sources
(computed): (i) Income from card games (ii) Income from betting (iii) Loss on maintenances of race horses |
2,12,000 12,000 (-) 2,50,000 (-) 10,000 8,000 (-) 12,000 (-) 64,000 36,000 (-) 6,000 5,400 36,000 24,000 (-) 4,600 |
Determine the Gross Total Income for the Assessment Year, 2020-21. 14
Solution:
Computation of Gross total income of Mr. A for the assessment year (2021-22)
|
Particulars |
Amount |
Amount |
|
1. Income From Salary Less: Loss under the head house property (set-off) |
2,12,000 2,12,000 |
Nil |
|
|
|
|
|
2. Income From House Property House I House II (Loss) House III (Loss) |
12,000 (2,50,000) (10,000) |
|
|
|
(2,48,000) |
|
|
Less: Set off from salary |
2,12,000 |
|
|
Loss from house property to be Carried forward 3. Income from Business (Non-Speculative Business) Business I Business II |
(36,000) 8,000 (12,000) |
Nil |
|
Business Loss to be carried forward |
(4,000) |
Nil |
|
Speculative Profit (Business IV) Less: Speculative Loss (Business II) |
36,000 (64,000) |
|
|
C/F of Speculative business loss |
(28,000) |
Nil |
|
4. Capital Gains STCL Long term capital gain |
(6,000) 5,400 |
|
|
STCL (Carried forward) |
(600) |
Nil |
|
5. Income from other sources Casual Income: Income from betting Income from card games Loss on maintenances of race horses (Carried forward for next 4 years) |
24,000 36,000 (4,600) |
Nil 60,000 |
|
Gross Total Income |
|
60,000 |
Note: Any loss of casual nature such as loss from horse race, card games, crossword puzzles, lotteries cannot be set off and carried forward from any income.
2.
The following are the particulars of income and loss of an individual under
different heads of income. Set off losses in the Assessment Year, 2018-19 and
find out the Gross Total Income: 14 DU 2019
|
Particulars |
Amount
(Rs.) |
|
Income from house property A Loss from house property B Income from interest on securities Loss from cycle business Profit from speculation business Loss from short-term capital asset Long-term capital loss Long-term capital gain (investments) |
4,000 9,000 25,000 35,000 35,000 7,000 25,500 21,500 |
Ans:
Computation of Gross Total Income for the Assessment year, 2018 – 2019
|
Particulars |
Amount |
Amount |
|
House Property Income: Income from house property A Loss from house property B to be set off Business Income: Profit from speculative business Set-off loss from cycle business Capital Gains: (i) Long Term Capital Gains (ii) Set-off loss from another long term capital asset Long term Capital loss to be C/F (iii) Short term capital loss to be C/F Income from other sources: Interest on securities |
4,000 (9,000) |
(5,000) Nil Nil 25,000 |
|
35,000 (35,000) |
||
|
21,500 (25,500) |
||
|
(4,000) (7,000) |
||
|
|
||
|
Gross total Income |
|
20,000 |
3.
Mr. A furnishes the following particulars of his income for the assessment year
2016-17. You are required to deal with set-off and carry forward of losses: 14
DU 2018
|
|
(Rs.) |
|
Profit from wholesale business Income from an agency business Speculation income Short-term capital gain Long-term capital gain |
50,000 4,000 1,000 6,000 12,000 |
The carry forward items from the assessment year, 2015-16 are:
|
|
(Rs.) |
|
Loss from retail business(now discontinued) Loss in agency business Loss from wholesale business Speculation loss Short-term capital loss Long-term capital loss |
5,000 6,000 5,000 6,000 7,500 9,000 |
Current year’s depreciation for wholesale business is Rs. 2,500.
Ans:
Calculation of Gross Total Income
|
Particulars |
Amount |
|
Amount |
|
A. Business Income I. Profit for wholesale business (Non-speculative) Less: Depreciation for the year |
50,000 2,500 |
|
|
|
Less: Brought forward losses of wholesale business Less: Brought forward losses of retail business |
47,500 5,000 5,000 |
|
|
|
|
37,500 |
37,500 (2,000) |
|
|
II. Income from Agency business Less: Loss brought down (2015-16) |
4,000 6,000 |
35,500 |
|
|
III. Speculative Income Less: Loss brought down (2015-16) |
1,000 6,000 |
|
|
|
Carry forward Speculation Loss |
(5,000) |
|
Nil |
|
B. Capital Gains I. Short term Capital Gain Less: Loss Brought down (2015-16) |
6,000 7,500 |
(1,500) 3,000 |
|
|
STCL set off against LTCG II. Long Term Capital Gain Less Loss Brought down (2015-16) |
12,000 9,000 |
1,500 |
|
|
Total Taxable Income |
|
|
37,000 |
4. Mr. A submits the following information
of his incomes and losses for the year ending 31.3.2016. DU 2017
|
Particulars |
Rs. |
|
1. Salary income (computed) 2. Income from house property: House A (income) House B (loss) House C (self-occupied) (loss) 3. Income from Business: Cloth business (profit) Hardware business (loss) Speculation profit Speculation loss 4. Capital gains: Short-term gain Short-term loss Long-term gain 5. Other sources: Income from betting Loss from card games Income from card games Interest on securities |
24,000 10,000 40,000 28,000 10,000 12,000 12,000 17,000 8,000 24,000 8,000 12,000 6,000 9,000 8,000 |
Compute the Gross Total Income of Mr. A after making inside and outside head adjustment of losses. You are also to show how much loss is to be carried forwarded to set off against future income. 14
Solution:
Computation of Gross total income of Mr. R for the assessment year (2012-13)
|
Particulars |
Amount |
Amount |
|
1. Income From Salary Less: Loss under the head house property (set-off) |
24,000 24,000 |
Nil |
|
|
|
|
|
2. Income From House Property House A House B House C |
10,000 (40,000) (28,000) |
|
|
|
(58,000) |
|
|
Less: Set off from salary Less: Set off from interest on securities |
24,000 8,000 |
|
|
3. Income from Business (Non-Speculative Business) Cloth Business Hardware Business |
(26,000) 10,000 (12,000) |
Nil |
|
Business Loss to be carried forward |
(2,000) |
Nil |
|
Speculative Profit Less: Speculative Loss |
12,000 (17,000) |
|
|
C/F of Speculative business loss |
(5,000) |
Nil |
|
4. Capital Gain STCG Less: STCL |
8,000 (24,000) |
|
|
STCL Long term capital gain |
(16,000) 8,000 |
|
|
STCL (Carried forward) |
(8,000) |
Nil |
|
5. Income from other sources Interest on securities Less: Loss from HP set off Casual Income: Income from betting Income from card games |
8,000 8,000 12,000 9,000 |
Nil 21,000 |
|
Gross Total Income |
|
21,000 |
Note: Any loss of casual nature such as loss from horse
race, card games, crossword puzzles, lotteries cannot be setoff and carried
forward from any income.
5. Mr. R. furnishes the following particulars of his income for
the previous year 2012 – 13: DU 2016
a)
Salary income – Rs. 68,000.
b)
Income from house A – Rs. 36,000
c)
Loss from house B – Rs. 24,000
d)
Loss from house C – Rs. 22,000
e)
Profit from business A – Rs. 60,000
f)
Profit from Business B – Rs. 70,000
g)
Profit from share business (speculative) – Rs. 82,000
h)
Loss from silver business (speculative) – Rs. 94,000
i)
Long-term capital gain on sale of shares on which security
transaction tax has been paid – Rs. 22,000
j)
Short-term capital loss on sale of land – Rs. 44,000
k)
Income from card games – Rs. 22,000
l)
Winning from lotteries (gross) – Rs. 60,000
m) Income from horse
race (gross) in Dibrugarh – Rs. 40,000
n)
Loss from horse race in Jorhat – Rs. 21,000
Compute gross
total income of Mr. R for the assessment year 2013 – 14.
Solution:
Computation of Gross total income of Mr. R for the assessment year (2012-13)
|
Particulars |
Amount |
Amount |
|
1. Income From Salary Less: Loss under the head house property (set-off) |
68,000 10,000 |
58,000 |
|
|
|
|
|
2. Income From House Property House A House B House C |
36,000 (24,000) (22,000) |
|
|
|
(10,000) |
|
|
Less: Set off from salary |
10,000 |
Nil |
|
3. Income from Business (Non-Speculative Business) Business A Business B |
60,000 70,000 |
|
|
|
1,30,000 |
1,30,000 |
|
Profit from share business (Speculative) Less: Loss from silver business (Speculative) |
82,000 (94,000) |
|
|
C/F of Speculative business loss |
(12,000) |
Nil |
|
4. Capital Gain LTCG (Share) – Long term capital gains from share are fully exempted STCG (C/F) |
Exempt (44,000) |
|
|
Carry forward of STCL |
(44,000) |
Nil |
|
5. Income from other sources Winning from card games Winning from lotteries Income from horse races |
22,000 60,000 40,000 |
1,22,000 |
|
Total Income (1+2+3+4+5) |
|
3,10,000 |
Note: Any loss of casual nature such as loss from horse race, card games, crossword puzzles, lotteries cannot be set off and carried forward from any income.
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