Set off and Carry forward of Losses Problems and Solutions, Income Tax Solved Practical Problems

 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.

0/Post a Comment/Comments

Kindly give your valuable feedback to improve this website.

{ads}