Parnership Firm

Querist : Anonymous (Querist) 16 July 2010 This query is : Resolved
What is the time frame for carry forward of losses for a partnership firm ?

Can the partners of this firmset -off their shares of losses gainstt their respective Business Income or Capital Gains ?

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A V Vishal (Expert) 16 July 2010
What is the time frame for carry forward of losses for a partnership firm ?

Ans. Business losses incurred in a tax year can be set off against any other income earned during that year, except capital gains. In the absence of adequate profits unabsorbed depreciation can be carried forward and set off against profits of the next assessment year, without any time limit. Unabsorbed business losses can be carried forward and set off against business profits of subsequent years for a period of eight years; the unabsorbed depreciation element in the loss can however, be carried forward idefinitely.

Can the partners of this firmset -off their shares of losses gainstt their respective Business Income or Capital Gains ?

Ans.No

Vineet (Expert) 17 July 2010
1. Business Loss (Other than loss from speculation business) of a firm can be adjusted against income under any other head during the relevant year. If can be carried forwaded for set off against Business Income for eitht assessment years. Speculation Loss can be adjusted against speculation profit only and can be carried forward for four years. Unabsorbed Depreciation can be carried forwarded indefinitely as it is treated as part of allowable depreciation of next year.

2. Partners share in Firms Income (Including Loss) is exempt in his hand. Hence he neither pays tax on his share of profit nor can he claim set off of share in firm's loss against his other incomes.

s.subramanian (Expert) 23 July 2010
i agree with vineet

soumitra basu (Expert) 01 August 2010
I agree

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