Q No 3:Types of Losses. How can set off and Carried Forward?

Immigration
These losses are usually profound, involving as they do so many of life's anchors and stabilisers. The typically involve losses of status, family roots, financial certainty, losses of support systems, losses of identity, losses of friendships, losses of language, losses of things known and self-evident, losses of cultural identities and certainties, losses of self-image and the like.

Physica Losses
These are losses which arise from serious illness such as heart attacks, or diagnoses which augur significant changes to a person's life, losses of limbs or other bodily functions such as sight, hearing, mobility and so on. Included in this heading are losses resulting from significant changes in weight, significant changes in physical appearance, the loss of youth and vigour and, finally, losses which result from aging. The losses attendant upon aging encompass both the physical losses of aging - failing organs, impotence and other dysfunctional syndromes, as well as the psychological adjustments needed to face mortality and death.

!e ationship Losses
These losses result from divorce or relationship break-up, losses which result from children leaving home (the empty nest syndrome , losses with the end of intimate friendships resulting from disagreements or immigration or death, and, finally, changes in family and social connections due to geographical moves (see above under immigration .

Psycho ogica Losses

!f course, all losses are encapsulated under the rubric of psychological losses but it is worth mentioning here, losses of working career resulting from loss of job following retrenchment, or following company relocation, forced retraining, taking early retirement, immigration, or from any other similar type of circumstance.

"#ndry Losses
This heading embraces certain losses already mentioned under immigration - that of the loss of status. This type of loss which is common in immigration, also may be endured as a result of changes in one's work environment - demotion or company changes or may result from any other material change in circumstance such as one's spouse or one's children suddenly becoming particularly financially successful. "o, too, if there are material changes in the market place, or in one's social circles. #nder this head may also be mentioned financial losses resulting from market shifts, bankruptcy and the like.

Losses of Freedom
$osses here typically result from imprisonment, but this type of loss can also arise from dramatic medical changes in one's person. %ot only is the person medically affected subject to this type of loss& so too is the care-giver. $osses of this type occur also with the birth of a child or result from other changes in the family. 'inally, this type of loss often arises from financial hardship.

Losses !es# ting from "ignificant Tra#ma

(any of the losses mentioned above also result from significant trauma but under this heading may be included catastrophic losses following wars, natural disasters, assaults, deaths and the like. These cataclysmic losses often result in such significant trauma that it results in post-traumatic stress disorder, re)uiring specialist handling in the treatment of such trauma.

"et $ff and Carry Forward of Losses

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Introd#ctions '. "et $ff of Loss from one "o#rce against Income from another so#rce #nder the same head of income.("ec.)*+ ,. "et $ff of Loss from one Head against income from another. ("ec.)'+ 3. Carry forward and set off of Loss #nder the head -Income from Ho#se Property.. ("ec.)' /+ 0. Carry Forward and "et $ff of /#siness Losses ("ec.),+ 1. Losses in "pec# ation /#siness ("ec.)3+ 2. Losses #nder the head 3Capita 4ains.. ("ec.)0+ ). Losses from certain specified so#rces fa ing #nder the head -Income from $ther "o#rces.. ("ec.)0 5+ 6. Ta7 e showing "et $ff and Carry Forward of Losses
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The process of setting off of losses and their carry forward may be covered in the following "teps* "tep9' : Inter-"ource adjustment under the same head of income

"tep9, : Inter-head adjustment in the same assessment year and will be applied only if a loss cannot be set off under Step-1. "tep9+ * Step-2 ,arry 'orward of $oss is applied only if a loss cannot be set off under Step-1 -

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If the net result for any assessment year in respect of any source falling under any head of income, other than .,apital gains/, is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head.

&;ceptions : 0. $oss from speculation business & 1. $ong-Term ,apital $oss & +. $oss from the activity of owning and maintaining race houses & 2. $oss can not be set off against winnings from lotteries, crossword pu33les, etc. & 4. $oss from sale of "ecurities.
,. "&T $FF $F L$"" F!$: $N& H&58 545IN"T INC$:& F!$: 5N$TH&! ("ec. )'+

If the %et 5esult of the computation under any head of income, other than Capital gains, is a loss , the same can be set off against the income from other heads subject to the following e6ceptions7 0. $oss from speculation business can not be set off against any other income 1. $ong-Term ,apital $oss & which can only set off against .,apital 8ain/. +. $oss from the activity of owning and maintaining race houses & which can not be set off against any other income. 2. $oss can not be set off against winnings from lotteries, crossword pu33les, etc. & 4. $oss from sale of "ecurities. 9. :usiness $oss can not be set off against "alary Income.
3. C5!!< F$!=5!8 5N8 "&T $FF $F L$"" %N8&! TH& H&58 3INC$:& F!$: H$%"& P!$P&!T<>. ( "ec. )' / +

;ny $oss under the head .Income from house property/ cannot be wholly set off against income from any other head. If such $oss can not be set off, then the whole loss shall be carried forward to the following assessment year and< (i be set off against the income from house property for that assessment year& and (ii the loss, if any, which has not been set off wholly shall be carried forward to the following assessment year not more than (= eight assessment years immediately succeeding the assessment year for which the loss was first computed.
0. C5!!< F$!=5!8 5N8 "&T $FF $F /%"IN&"" L$""&". ( "ec. ),+

The right of carry forward and set off of loss arising in a business or profession is subject to the following restrictions * '. Loss can 7e set off on y against /#siness Income : 5 loss to the assessee under the head .>rofits and gains of business or profession/, and such loss cannot be or is not wholly set off against income under any head of income and he has no income under any other head, the whole

loss shall be carried forward to the following assessment year, and< (i it shall be set off against the profits and gains, if any, of any business or profession carried on by him & (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 assessment year and so on * ,. Loss can 7e carried forward for 6 <ears : %o loss shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.

3. !et#rn of Loss sho# d 7e s#7mitted in Time : ; $oss can not be carried forward unless it is determined in pursuance of a 5eturn 'iled within the time allowed.
1. L$""&" IN "P&C%L5TI$N /%"IN&"" ( "ec. )3+

0. ;ny loss, computed in respect of a speculation business carried on by the assessee, shall not be set off e6cept against profits and gains of another speculation business. 1. ?here for any assessment year any loss computed in respect of a speculation business has not been wholly set off, the whole loss where the assessee had no income from any other speculation business, shall be carried forward to the following assessment year, and< (i it shall be set off against the profits and gains of any speculation business and (ii The loss which cannot be wholly so set off shall be carried forward to the following assessment year and so on. +. %o loss shall be carried forward under this section for more than 2 @fourA assessment years immediately succeeding the assessment year for which the loss was first computed. 2.5eturn of $oss should be submitted in Time * ; $oss can not be carried forward unless it is determined in pursuance of a 5eturn 'iled within the time allowed.
2. L$""&" %N8&! TH& H&58 3C5PIT5L 45IN"> ( "ec. )0 +

0. In case of any $oss under the head .,apital gains/, the whole loss shall be carried forward to the following assessment year, and< (a ;ny loss relates to a short-term capital asset shall be set off against income, from .,apital gains/. (b ;ny loss relates to a long-term capital asset shall be set off against income from .,apital gains/ assessable for that assessment year in respect of any other capital asset other than a short-term capital asset&

(c if the loss cannot be wholly so set off shall be carried forward to the following assessment year and so on.A 1. %o loss shall be carried forward for more than (= eight assessment years immediately succeeding the assessment year for which the loss was first computed.
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The amount of loss incurred by the assessee in the activity of owning and maintaining race horses in any assessment year shall not be set off against income from any source other than the activity of owning and maintaining race horses in that year and shall be carried forward to the following assessment year and< (a it shall be set off against the income from the activity of owning and maintaining race horses assessable for that assessment year * (b if the loss cannot be wholly so set off shall be carried forward to the following assessment year and so on& so, however, that no portion of the loss shall be carried forward for more than 2 assessment years immediately succeeding the assessment year.
6. T5/L& "H$=IN4 "&T $FF 5N8 C5!!< F$!=5!8 $F L$""&"

Head of income #nder which Loss is inc#rred

=hether Losses can 7e Time imit for =hether oss can 7e carried forward and carry forward set off within the same set off in s#7se?#ent and set off of year years. osses %nder the %nder any %nder the %nder any same head other Head same head other Head

0. Income from "alaries 1. Income from Bouse >roperty +. >rofit and gain from :usiness or >rofessions * a. %on-speculation :usiness b. "peculation :usiness c. #nabsorbed Depreciation d. #nabsorbed Investment or Development

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allowance. 2. ,apital 8ain ("hort-Term 4. ,apital 8ain ($ong -Term 9. Income from !ther "ources* a. $otteries, ,rossword, >u33le, ,ard 8ames, 8ambling, or betting of any form. b. $oss from activity of owning and maintaining 5ace Borses c. !ther Income Ces Ces %o %o Ces Ces %o %o = years = years

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