September 2025

Section 73 of the Income Tax Act, 1961, governs the treatment of speculation business losses, imposing strict rules on how such losses can be adjusted and carried forward. Below is a detailed breakdown of the provisions, conditions, and practical implications. 1. What is a Speculation Business? A speculation business involves transactions where: The contract for purchase/sale of commodities, […]

Section 73A of the Income Tax Act, 1961, governs the treatment of losses incurred in specified businesses under Section 35AD. These rules are distinct from regular business loss provisions, with unique restrictions and benefits. Below is a detailed analysis: 1. Key Features of Section 73A A. Applicability Applies onlyto losses from businesses classified as “specified businesses” under Section 35AD. Examples

Section 74 of the Income Tax Act, 1961 governs the treatment of capital losses, providing specific rules for their set-off and carry forward. Here’s a comprehensive analysis: 1. Types of Capital Losses Capital losses are categorized based on the holding period of assets: LOSS TYPE HOLDING PERIOD TREATMENT Short-Term Capital Loss (STCL) ≤ 36 months

Section 74A of the Income Tax Act, 1961, provides specific rules for the treatment of losses incurred from owning and maintaining race horses. This provision is distinct from other loss provisions due to its restrictive nature. 1. Applicability of Section 74A Applies onlyto losses arising from: Owning race horses Maintaining race horses(including training, stabling, and related expenses). Does not

Under the Income Tax Act, brought forward losses must be set off against eligible income in the immediately succeeding years, subject to specific conditions. Here’s a structured breakdown: 1. Legal Requirement for Set-Off Section 72(1)(Business Losses) & Section 74 (Capital Losses) mandate that carried-forward losses must be adjusted at the first opportunity in subsequent years. No voluntary deferralis permitted—taxpayers cannot choose to

Section 115BAC of the Income Tax Act, 1961, introduces a simplified tax regime with lower slab rates but restricts many deductions ansd exemptions, including provisions for set-off and carry-forward of losses. Below is a detailed analysis of how losses are treated for individuals and HUFs opting for the new tax regime. 1. Key Restrictions on Loss Set-Off Under

Section 72A of the Income Tax Act, 1961, provides exceptional relief for companies undergoing restructuring (amalgamation, demerger, or reorganization) by allowing the carry forward and set-off of accumulated business losses and unabsorbed depreciation. This ensures that genuine business reorganizations do not result in the loss of tax benefits. Below is a detailed analysis: 1. Key Scenarios Covered Under

1. Set-Off Rules for Current Year Losses Intra-head adjustment (Section 70): Business losses can be set off against other business income of the same firm Example: Loss from manufacturing unit can offset profit from trading division Inter-head adjustment (Section 71): Unadjusted business losses can be set off against: Capital gains Income from other sources Cannot

Here’s a detailed explanation of Section 78(2) regarding carry forward and set-off of losses in case of succession: 1. General Rule for Succession [Section 78(2)] Normally, when a business is succeeded by another person (other than by inheritance), neither the predecessor nor successor can carry forward losses. This prevents artificial transfer of losses to new entities

Section 79 of the Income Tax Act, 1961, imposes strict restrictions on the carry-forward and set-off of losses in closely-held companies (private companies) when there is a change in shareholding. Here’s a detailed breakdown: 1. Applicability of Section 79 Applies only to closely-held companies(private limited companies). Does not apply to: Public limited companies listed on a recognized stock exchange. Government-owned companies.