Unabsorbed Depreciation
VIRENDER GUPTA
(Querist) 19 January 2010
This query is : Resolved
Can Brought forward unabsorbed depreciation set off with Income from House property if there is no profit from business in Current year.
e.g. Income from H.P. 1000.00
Current year loss -50.00
current year Dep. -75.00
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Balance 875.00
B/F Unabsorbed Depr. 1000.00
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- 125.00
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my query is still stands about B/F depreciation . Whether B/F Unabsorbed depreciation can be set off with other incomes if current year business head has no profit
A V Vishal
(Expert) 19 January 2010
Loss from Business/profession [Sec 72]
* Any loss under the head, profit and gain of business, other than speculation loss and depreciation can be set off against any other business income or any other head of income, except salary income, in the same assessment year.
* After such setting off, if the resultant figure is yet a loss (business loss): If the loss in greater than income from any other business or income from any other head, then such loss can be carried forward up to eight assessment years. On carrying forward to subsequent years, this loss can be set off only against business income and not against any other head of income.
* Speculation loss can be set off only against speculation profit in the same assessment year. But even after such setting off if the resultant figure is a loss, then it can be carried forward for set off in subsequent years up to four assessment years. From assessment year 2006-07 up to assessment year 2005-06 such loss could be carried-forward for eight assessment year. In subsequent years, setting-off of the loss is allowed only against speculation profit [Section 73].
Transactions in derivatives entered into on recognised stock exchange through a broker or a Securities and Exchange Board of India (Sebi)-recognised intermediary and supported by a time-stamped contract note is excluded from the definition of speculative transaction [Section 43(5)(d)]. Thus, such loss is to be treated in the same manner as non speculative business loss.
Speculative business loss can be set off against only speculative business income. But non-speculative business loss can be set off against any business income (whether speculative or non speculative).
* Depreciation can be set off in the same assessment year as well as in the subsequent assessment years against business income or any other head of income except salary income. Further, depreciation can be carried forward indefinitely for set-off in subsequent years [Section 32(2)].
* As unabsorbed depreciation can be carried forward for any number of years. In subsequent years, one must first set off current year's depreciation, then brought forward business loss and then the unabsorbed depreciation.
* Continuity of business is now not necessary for the purpose of set-off and carry-forward.
VIRENDER GUPTA
(Querist) 19 January 2010
my query is still stands about B/F depreciation . Whether B/F Unabsorbed depreciation can be set off with other incomes if current year business head has no profit
VIRENDER GUPTA
(Querist) 19 January 2010
Can Brought forward unabsorbed depreciation set off with Income from House property if there is no profit from business in Current year.
e.g. Income from H.P. 1000.00
Current year loss -50.00
current year Dep. -75.00
------
Balance 875.00
B/F Unabsorbed Depr. 1000.00
--------
- 125.00
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my query is still stands about B/F depreciation . Whether B/F Unabsorbed depreciation can be set off with other incomes if current year business head has no profit
Vineet
(Expert) 19 January 2010
By virtue of provisionsof section 32(2), the brought forward unabsorbed depreciation allowance is added in current years allowance and deemed to be part of the same. Hence the entire brought forward depreciation allowance can be claimed in the current year against the available adjustable income subject to provision of section 72(2) i.e. first effect to be given to the unabsorbed business loss.
Calculation in your case would be
Income from HP 1000
Less Business loss 50
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Balance 950
Less: Depreciation incl bf 950
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Total Income Nil
Unabsorbed depreciation to be c/f 125
A V Vishal
(Expert) 19 January 2010
Dear Gupta
Please take pains atleast to read and understand the relevant provisions contained in the Act which were reproduced for your convienence, the act is so clearly stating Depreciation can be set off in the same assessment year as well as in the subsequent assessment years against business income or any other head of income except salary income. Further, depreciation can be carried forward indefinitely for set-off in subsequent years [Section 32(2)].
