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    What sections of the Income Tax Act govern the carry forward and offset of losses from the speculative business?

    Answered 25-Nov-2022

    If a loss from a small business can't be adjusted in the year it occurs, the unadjusted loss might be carried forward to be corrected in the next year. Such losses may be mitigated in the next year(s) by removing them from speculative business (may be same or any other speculative business).

    Only if the return of income/loss of the year in which the loss is incurred is provided on or before the due date of filing the return, as stipulated under section 139(1), may a loss from a speculative business be carried forward.

    For four years that immediately follow the year in which the loss is incurred, it may be carried forward.

    The aforementioned clauses do not apply to the unabsorbed depreciation of speculative assets (the aforementioned clauses relating to unabsorbed depreciation are considered later).

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