Losses Chapter- 14
From the above it is evident that an entity may set-off it losses incurred prior to the change in
underlying ownership, if it continues to conduct the same business and does not engage in any new
business or investment.
Entity means a company or an association of persons [98(2)]
Underlying Ownership means‘ ownership interest’ in the entity held, directly or indirectly through an
interposed entity or entities, by an individual or by a person not ultimately owned by individuals [u/s
98(2)].
Ownership Interest means a share in a company or the interest of a member in an Association of
Persons [u/s 98(2)].PRACTICE QUESTIONS WITH SOLUTIONS
Q.NO.1 For the tax year 20 23 , Miss Summer provided the following particulars of income. Compute her
total income.
Rs.
- Profit from speculation business 150,000
- Profit from' Capital Gains' 100,000
- Loss from wholesale business 250,000
- Income from dividend 40,000
Solution: Rs.
Profit from speculation business 150,000
Profit from capital gains (assumed u/s 37 - NTR) 100,000
Loss from whole sale business (assumed covered under NTR) (250,000)- Dividend is taxable under FTR.
Q.NO. 2 Miss Amna Hashmi, an individual, sustains a loss in speculation business of Rs. 20,000 during the
tax year 20 23. The detail of other income and losses for the same period is an under.
Rs.
i Income from salary 600,000
ii Capital Gain (exempt) 200,000
iii Dividend income 150,000
iv Loss from 'Income from Other Sources (250,000)
Required:
Compute total income of Miss Amna Hashmi after making inter-head adjustment of losses.
Solution: Rs.
Income from salary 600,000
Total taxable income 600 ,000N- 1 Loss on 'Income from Speculation Business' cannot be set off other than Income from Income from
Speculation Business so it will be carried forward up to six years
N- 2 Exempt capital gain cannot be used to set off of losses.
N- 3 Dividend is taxable under FTR therefore any other loss cannot be set off against the same.
N- 4 Loss under the head income from other sources cannot be set off against income from salary.
Q.NO.3 Fraz Attari, an individual, suffered a loss of Rs. 150,000 during the tax year 20 23 from sale of a
capital asset (shares of a public company). For the same year his income from business is Rs. 195,000. He
made inter-head adjustment and computed total income at Rs. 45,000. Is he allowed to do so under the
law?
Solution: