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What is Carry forward and set off of business losses? Section 72 of Income Tax Act 1961

Carry forward and set off of business losses is defined under section 72 of Income Tax Act 1961. Provision under this Section is:

Section 72 of Income Tax Act "Carry forward and set off of business losses"

Section 72. (1) Where for any assessment year, the net result of the computation under the head "Profits and gains of business or profession" is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and-

 

(i) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year ;

(ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on :

Provided that where the whole or any part of such loss is sustained in any such business as is referred to in section 33B which is discontinued in the circumstances specified in that section, and, thereafter, at any time before the expiry of the period of three years referred to in that section, such business is re-established, reconstructed or revived by the assessee, so much of the loss as is attributable to such business shall be carried forward to the assessment year relevant to the previous year in which the business is so re-established, reconstructed or revived, and-

(a) it shall be set off against the profits and gains, if any, of that business or any other business carried on by him and assessable for that assessment year; and

(b) if the loss cannot be wholly so set off, the amount of loss not so set off shall, in case the business so re-established, reconstructed or revived continues to be carried on by the assessee, be carried forward to the following assessment year and so on for seven assessment years immediately succeeding.

(2) Where any allowance or part thereof is, under sub-section (2) of section 32 or sub-section (4) of section 35, to be carried forward, effect shall first be given to the provisions of this section.

(3) No loss (other than the loss referred to in the proviso to sub-section (1) of this section) shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.

Income Tax Act 1961

What is Set off of loss from one head against income from another?. What is Transitional provisions for set off of loss under the head "Income from house property"? Section 71 and 71A of Income Tax Act 1961

What is Carry forward and set off of loss from house property? Section 71B of Income Tax Act 1961

What is Carry forward and set off of business losses? Section 72 of Income Tax Act 1961

What are the Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in amalgamation or demerger, etc? Section 72A of Income Tax Act 1961

What are the Provisions relating to carry forward and set-off of accumulated loss and unabsorbed depreciation allowance in scheme of amalgamation of banking company in certain cases? Section 72AA of Income Tax Act 1961

What are the Provisions relating to carry forward and set off of accumulated loss and unabsorbed depreciation allowance in business reorganisation of co-operative banks? Section 72AB of Income Tax Act 1961

What is the treatment of Losses in speculation business? Section 73 of Income Tax Act 1961

What is Carry forward and set off of losses by specified business? What is Losses under the head "Capital gains? Section 73A and 74 of Income Tax Act 1961

What is Losses from certain specified sources falling under the head "Income from other sources"? Section 74A of Income Tax Act 1961

What is Losses of firms? How to Carry forward and set off of losses in case of change in constitution of firm or on succession? Section 75 and 78 of Income Tax Act 1961

What is Carry forward and set off of losses in the case of certain companies Submission of return for losses? Section 79 and 80 of Income Tax Act 1961

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