Section 113 — Set off and carry forward of losses computed in respect of speculation business
Old Act equivalent: Section 73 of IT Act 1961 Sub-part: Set off, or carry forward and set off of losses
Statutory Text
- (1) Any loss, computed in respect of a speculation business carried on by
the assessee shall be set off only against profits and gains of another spec ulation business. (2) Where for any tax year, loss computed in respect of a speculation business cannot be wholly set off under sub-section (1), so much of the loss not so set off or the whole loss, as the case may be, shall be carried forward to the following tax year and—
(i) be set off against the profits and gains, if any, of any speculation business carried on by him for such tax year; and
(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 tax year and so on. (3) No loss shall be carried forward under this section for more than four tax years immediately succeeding the tax year for which the loss was first computed. (4) Where any allowance of part thereof under section 33(11) or 45(7) related to the speculation business is to be carried forward, effect shall first be given to the provision of this section. (5) In this section, where any part of the business of the assessee (being a compa ny) consists of purchase and sale of shares of other companies, then the assessee shall be deemed to be carrying on a speculation business, to the extent to which its business consists of purchase and sale of such shares. (6) The provisions of sub-section (5) shall not apply to an assessee, being a company, if—
(a) its gross total income consists mainly of income which is chargeable under the heads “Income from house property”, “Capital gains” or “Income from other sources”; or
(b) its principal business is of trading in shares or banking or the granting of loans and advances. Set off and carry forward of losses computed in respect of specified business.
Provisos
None.
Explanations
None.
Tables
None.
Key Structure
- Applies to: All assessees carrying on speculation business.
- Conditions: Loss from speculation business to be set off only against speculation business profits.
- Time limits: Carry forward for maximum 4 tax years from year of loss.
- Monetary limits: No specific monetary limit.
- Exceptions: Company engaged in purchase and sale of shares deemed speculation business unless principal business is share trading, banking, or lending; does not apply if gross total income mainly from house property, capital gains, or other sources.
Cross-References
- Section 33
- Section 45
Amendment Notes
None noted from the extracted pages.