PART I: MCQs:
Case Scenario 1
Atma, widow of Shri Niraluk, supplies the following details for the P.Y. 2024-25:
a. She has two house properties. 2nd house is self-occupied and 1st house is let-out for ₹ 10,000 p.m.
Municipal tax paid for 2nd house ₹ 5,000 and that for 1st house ₹ 3,000.
Interest on loan for 1st house is ₹ 22,000.
b. She is working with A Ltd. on following terms:
Basic Salary ₹ 5,000 p.m.
Bonus ₹ 50,000
D.A. ₹ 2,000 p.m.
HRA ₹ 3,000 p.m. (she resides in Kolkata)
Car of 1.4 ltr is provided for office as well as personal purpose.
c. She received interest on her fixed deposit ₹ 5,000. Interest on Saving Bank Account ₹ 6,000. Interest
on deposits in a public Ltd. company ₹ 5,000.
d. She made a mediclaim policy of her dependent mother aged 62 years and paid a premium of ₹ 5,000.
e. Her handicapped brother is fully dependent on her.
f. She paid LIC premium ₹ 8,000 and made repayment of housing loan taken for acquisition of second
house ₹ 43,000 (including ₹ 22,000 interest).
g. During the previous year, she sold 200 debenture of X Ltd. on behalf of her minor son for ₹ 1,00,000.
She acquired such debenture on 1-4-2018 for ₹ 50,000 and gifted the same to her minor child on 1-4-
2021.
h. She paid tuition fees for her
Elder son (Mumbai University) ₹ 10,000.
Younger son (Melbourne University, Australia) ₹ 25,000
Based on the above information, answer multiple choice question no. 1-4:
1. What will be her taxable salary? [if she has not opted out of default tax regime]
a) 1,16,600
b) 1,41,600
c) 80,600
d) 1,05,600 [2 marks]
2. What will be her taxable income under the head income from house property? [If she wants to
opts for old regime]
a) 59,900
b) 37,900
c) 81,900
d) 1,17,000 [2 marks]
3. What will be taxable capital gain? [If she wants to opts for old regime]
a) Nil
b) 50,000
c) 48,500
d) 1,00,000 [1 mark]
4. State the amount of deduction under chapter VIA if she wants to opt for old regime.
a) 1,30,000
b) 1,25,000
c) 1,04,000
d) 1,50,000 [2 marks]
5. Mr. Aditya started business of manufacturing tables in February 2025. He follows mercantile
system of accounting. He purchased wood from Mr. A, Mr. B and Mr. C. The details of purchases
and payment made are as under:
• Mr. A, a micro enterprise, purchased on 15.02.2025, Amount ₹ 15 lakhs, Payment due
Within 30 days from the date of purchase as per written agreement, Date of payment
29.03.2025
• Mr. B, a small enterprise, purchased on 17.03.2025, Amount ₹17 lakhs, No written
agreement, Date of payment 15.04.2024
• Mr. C, a medium enterprise, Purchased on 25.03.2025, Amount ₹18 lakhs, Payment due
within 40 days from the date of purchase Date of payment 30.11.2025.
How much deduction would be available to Mr. Aditya in A.Y. 2025-26 in respect of
purchases made during the P.Y. 2024-25 while computing business income?
(a) Nil
(b) ₹33 lakhs
(c) ₹15 lakhs
(d) ₹32 lakhs
[2 marks]
Case Scenario 2
Mr. Chalu is a member of HUF. It consists of Mr. Chalu, Mrs. Chalu [a housewife], Mr. Chalu’s major
son (Mr. Aalu) & Mr. Chalu’s minor son (Mr. Balu).
On 1/4/2023, Mr. Chalu transferred his house property acquired through his personal income to the
HUF without any consideration.
On 1/7/2024, HUF is partitioned and such property being divided equally.
Net annual value of the property for the P.Y. 2023-24 is ₹ 80,000 & that for the P.Y. 2024-25 is ₹
1,00,000.
Based on the above information and assuming [They do not own any other house property], answer
multiple choice question no. 6-8:
6. What will be income from house property in the hands of Mr. Chalu for the A.Y. 2024-25?
a) 80,000
b) Nil
c) 56,000
d) 70,000
[2 marks]
7. What will be income from house property in the hands of Mr. Chalu for the A.Y. 2025-26?
[Under old regime]
a) 17,500
b) 30,625
c) 56,875
d) 55,375
[2 marks]
8. What will be income from house property in the hands of Mr. Aalu & Mr. Balu for the A.Y.
2025-26? [Under old regime]
a) 13,125 each for both Mr. Aalu & Mr. Balu
b) 17,500 each for both Mr. Aalu & Mr. Balu
c) 17,500 for Mr. Aalu & Nil for Mr. Balu
d) 13,125 for Mr. Aalu & Nil for Mr. Balu
[2 marks]
Note: Question no. 1 is compulsory, attempt any two from question no. 2-4
Q. 1
Mr. Annamalaai, a resident Indian aged 35 years, has provided you the following information for the
previous year ended on 31.03.2025
(i) He occupies ground floor of his residential building and has let out first floor for residential
use for a monthly rent of ₹20,000. He has paid municipal taxes of ₹50,000 for the current
financial year. Both floors are of equal size. He has taken a loan from bank of ₹30 lakhs for
the construction of this property in 2015 and has repaid ₹2,06,000 (including interest
₹1,01,000) during the year 2024-25.
(ii) He owns an industrial undertaking established in a SEZ and which had commenced
operation during the financial year 2019-20. Total turnover of the undertaking was ₹400
lakhs. Export turnover received in India in convertible foreign exchange on or before
30.9.2025 is ₹200 lakhs. This industrial undertaking fulfills all the conditions of section 10AA
of the Income-tax Act, 1961. Profit from this industry is ₹ 40 lakhs.
(iii) Mr. Annamalaai sold equity shares of different Indian companies on 25th March, 2025:
a. 1000 shares of Samay ltd @ ₹100 per share. [Acquired on 5th Jan 2025 @ ₹50 per share
(STT paid at acquisition)]
b. 1000 shares of Jamal ltd @ ₹200 per share. [Acquired on 5th Jan 2015 @ ₹100 per share
(STT paid at acquisition)] [FMV as on 31.1.2018: ₹ 80 per share]
Sale proceeds were subject to brokerage of 0.1% and securities transaction tax of 0.125% on
the gross consideration.
(iv) He received royalty of ₹3,00,000 from abroad for a book authored by him in the nature of
artistic. The rate of royalty as 20% of value of books and expenditure made for earning this
royalty was ₹50,000. The amount remitted to India till 30th September, 2025 is ₹2,00,000.
(v) He received income-tax refund of ₹20,000 (including interest ₹1000) relating to the
assessment year 2024-25.
(vi) He made payment of ₹100,000 on 1.11.2024 vide cheque towards medical insurance as
lumpsum premium for himself and his wife till 31.10.2028. He also made cash payment of
₹10,000 towards preventive health checkup for himself and his wife.
(vii) Mr. Annamalaai deposited ₹80,000 in Public Provident Fund and ₹50,000 in 5 years term
deposit in the name of his minor son.
You are required to compute the total income and tax liability of Mr. Annamalaai under section 115BAC
as well as under normal provisions for the A.Y. 2025-26. Ignore AMT provisions. [15 Marks]
COMPUTATION OF TOTAL INCOME AND TAX LIABILITY OF MR. ANNAMALAAI FOR A.Y. 2025-26
UNDER SECTION 115BAC
Amount [₹] Amount [₹]
I. Income from house property: 1,00,000
Let out portion [First floor]
Gross Annual Value [Rent received is taken as GAV, in the absence of other 2,40,000
information]
Less: Municipal taxes paid by him in the P.Y. 2024-25 pertaining to let out
portion [₹50,000/2] (25,000)
Net Annual Value (NAV)
2,15,000
Less: Deduction u/s 24
(a) 30% of ₹2,15,000 64,500 (1,15,000)
(b) Interest on loan [1,01,000/2] 50,500
1,00,000
Self-occupied portion [Ground Floor]
Nil
Annual Value Nil
[No deduction is allowable in respect of municipal taxes paid]
Net Annual Value (NAV) Nil
Less: Interest on loan [Not allowable under section 115BAC] Nil
II. Profits and gains of business or profession 40,00,000
Income from SEZ unit
III. Capital Gains 1,49,700
Short-term capital gains on sale of equity shares of Samay Ltd. (since held for
not more than 12 months) 49,900
Full Value of Consideration [1000 x 100] 1,00,000
Less: Brokerage @ 0.1% (100)
Net sale consideration 99,900
Less: Cost of acquisition [1000 x 50] (50,000)
Long-term capital gains on sale of equity shares of Jamal Ltd. (since held for 99,800
more than 12 months)
Full Value of Consideration [1000 x 200] 2,00,000
Less: Brokerage @ 0.1% (200)
Net sale consideration 1,99,800
Less: Cost of acquisition (1,00,000)
Higher of cost of acquisition of ₹100,000 (100 x 1000) and 80,000, being lower
of FMV of 80,000 and full value of consideration of 2,00,000
IV. Income from Other Sources 2,51,000
Royalty from artistic book 3,00,000
Less: Expenses incurred for earning royalty (50,000) 2,50,000
1,000
Interest on income-tax refund
Gross Total Income 45,00,700
Less: Deduction under Chapter VI-A [Not allowable under section 115BAC] –
(NA)
Total Income 45,00,700
Tax on LTCG exceeding ₹1.25 lakhs @12.5% u/s 112A ----------------
Tax on STCG of ₹49,900 @20% u/s 111A 9,980
Tax on remaining total income of ₹43,51,000
Upto ₹3,00,000 Nil
₹3,00,001 - ₹7,00,000[@5% of ₹4 lakhs] 20,000 ₹7,00,001 -
₹10,00,000[@10% of ₹3 lakhs] 30,000 ₹10,00,001 -
₹12,00,000[@15% of ₹2 lakhs] 30,000 ₹12,00,001 -
₹15,00,000[@20% of ₹3 lakhs] 60,000 ₹15,00,001 - 9,95,300
₹43,51,000[@30% of ₹28,51,000] 8,55,300
10,05,280
(40,211)
Add: Health and education cess@4%
Tax liability
10,45,491
Tax liability (Rounded off)
10,45,490
COMPUTATION OF TOTAL INCOME AND TAX LIABILITY OF MR. ANNAMALAAI FOR A.Y. 2025-26
UNDER NORMAL PROVISIONS OF THE ACT
AMOUNT (₹)
Gross Total Income as per section 115BAC 45,00,700
Less: Interest on loan for self occupied property [1,01,000/2] (50,500)
Gross Total Income as per normal provisions of the Act 44,50,200
Less: Deduction u/s 10AA [Since the industrial undertaking is established in SEZ, it
is entitled to deduction u/s 10AA @100% of export profits, since P.Y.2024-25, being
the 6th year of operations]
[Profits of the SEZ x Export Turnover received in India in convertible foreign (10,00,000)
exchange on or before 30.9.2025/Total Turnover] x 50%
[₹40 lakhs x ₹200 lakhs/ ₹400 lakhs x 50%]
Less: Deduction under Chapter VI-A
Deduction under section 80C
Repayment of housing loan 1,05,000
Public Provident Fund 80,000 (1,50,000)
5 years Term deposit (NA as deduction in the name of minor son) – -----------
Restricted to 1,50,000
Deduction under section 80D
Medical insurance premium [1,00,000 x 1/5] 20,000
Preventive health check up of ₹10,000, subject to maximum of ₹5,000 5,000
(25,000)
Deduction under section 80QQB
Royalty [₹3,00,000 x 15/20 = ₹2,25,000, restricted to amount brought into India in (1,50,000)
convertible foreign exchange ₹2,00,000 minus ₹50,000 expenses already allowed as
deduction while computing royalty income]
Total Income
Tax on total income of ₹31,25,200 31,25,200
Tax on LTCG exceeding ₹1.25 lakhs @12.5% u/s 112A
Tax on STCG of ₹49,900 @20% u/s 111A ---------------
Tax on remaining total income of ₹29,75,500 9,980
Upto ₹2,50,000 Nil
₹2,50,001 - ₹5,00,000[@5% of ₹2,50,000] 12,500
₹5,00,001 - ₹10,00,000[@20% of ₹5,00,000] 1,00,000 ₹10,00,001 -
₹29,75,500[@30% of ₹ 19,75,500] 5,92,650
7,05,150
Add: Health and education cess@4%
7,15,130
Tax liability
28,605
Tax liability (rounded off)
7,43,735
7,43,740
Q. 2 (a)
Ms. Ayirp has always been financially aware and strategic with her investments. In March 2022, she saw
an opportunity in gold and purchased gold jewellery worth ₹5,00,000, believing it would be a safe
investment for the future. In November 2024, gold prices increased and she decided to sell her jewellery
on 30.11.2024 for ₹6,50,000. She also sold her house property in Mumbai on 01.03.2025 for ₹50 lakhs.
The stamp duty value of property at the time of transfer was ₹90 lakhs. She purchased this property on
1.09.1995 for ₹7lakhs. The FMV of the property as on 1st April, 2001 was ₹11 lakhs and Stamp duty
value on the said date was ₹10 lakhs. She had incurred brokerage and other expenses @1% on purchase
price at that time.
Compute the capital gain tax to be paid by Ms. Ayirp for A.Y. 2025-26 assuming her other income
exceeds the basic exemption limit.
CII – F.Y. 2001-02: 100; F.Y. 2021-22: 317; F.Y. 2024-25:363 [5 Marks]
Solution:
COMPUTATION OF CAPITAL GAIN TAX PAID BY MS. AYIRP FOR A.Y. 2025-26
Particulars ₹
On sale of jewellery
Sale consideration 6,50,000
Less: Cost of acquisition
(As transfer is on or after 23.07.2024, the indexation benefit would not be available) (5,00,000)
Long term capital gains
[Since jewellery is sold on or after 23.7.2024 and held for more than 24 months] 1,50,000
On sale of house property
Full Value of Consideration [Stamp duty value of ₹90 lakhs, since stamp duty value of ₹90 lakhs exceed
actual consideration of ₹50 lakhs by more than 10%] 90,00,000
Less: Cost of acquisition [₹10,00,000] (As transfer is on or after 23.07.2024, the indexation benefit would
not be available) (10,00,000)
80,00,000
Note: Cost of acquisition:
Higher of –
- Actual cost ₹7,00,000 + ₹7,000 = ₹7,07,000 and
- Lower of FMV as on 1.4.2001 of ₹11 lakhs and SDV of ₹10 lakhs.
Capital Gain chargeable to tax 81,50,000
Tax on capital gains
Tax on LTCG on sale of jewellery [₹1,50,000 x 12.50%] 18,750
Tax @12.5% on LTCG on sale of house property
[As the asset is a long term capital asset, being land or building acquired before 23.07.2024 and
transferred on or after 23.07.2024 by a resident individual, the tax shall be computed with indexation
@20% and without indexation @12.5%, whichever is beneficial to the assessee.]
Tax @20% with indexation
– Sale consideration ₹90,00,000
Less: Indexed cost of acquisition ₹10,00,000 x 363/100 = (₹36,30,000)
LTCG = ₹53,70,000
Tax @20% = ₹53,70,000 x 20% = ₹10,74,000
Tax @12.5% without indexation
- Tax @12.5% = ₹80,00,000 x 12.5% = ₹10,00,000 10,00,000
10,18,750
Add: Surcharge @10% [Since total income > ₹50 lakhs but <₹1 crore] +1,01,875
11,20,625
Add: HEC@4% 44,825
Tax on capital gain 11,65,450
Q.2 (b)
Mr. Exman, age 89 years, a resident individual, gives the following particulars of his receipts for A.Y.
2025-26 :
1. Installment received from the bank under reverse mortgage arrangement ₹ 8,50,000
2. Interest on bank term deposits ₹ 3,00,000
3. Interest on bank saving a/c ₹ 85,000
4. Pension from Central Govt. ₹ 3,50,000
5. STCG on sale of personal dining table and chairs ₹ 12,00,000
6. Income from dairy farming on his rural agricultural land ₹ 10,000
Compute his total income and Income Tax thereon for A.Y. 2025-26 considering that assessee has opted
out of Default tax regime.
[5 marks]
Answer
COMPUTATION OF TOTAL INCOME AND TAX LIABILITY OF MR. EXMAN FOR A.Y. 2025-26
₹ ₹
Income from Salaries
Pension from Central Government 3,50,000
Less: Standard deduction u/s 16 (50,000) 3,00,000
Capital Gains
STCG on sale of dining table and chairs [Not a capital asset since it is personal effects] Nil
Income from Other Sources
Installment received under reverse mortgage [Exempt u/s 10(43)] Nil
Interest on bank term deposits 3,00,000
Interest on bank saving a/c 85,000
Income from dairy farming on agricultural land 10,000 3,95,000
Gross Total Income 6,95,000
Less: Deduction under section 80TTB (50,000)
Total Income 6,45,000
Tax liability Up to ₹ 5,00,000 Nil
₹ 5,00,001 – ₹ 6,45,000 [@20% of ₹ 1,45,000] 29,000 29,000
Add: Health and education cess @4% 1,160
Tax liability 30,160
Q. 3 (a) Mr. Sahdev, a resident Indian, is in retail business and his turnover for F.Y.2023-24 was ₹12
crores.
He regularly purchases goods from another resident, Mr. Baranwal, a wholesaler, and the aggregate
payments during the F.Y.2024-25 was ₹95 lakh (₹20 lakh on 1.6.2024, ₹25 lakh on 12.8.2024, ₹22 lakh
on 23.11.2024 and ₹28 lakh on 25.3.2025).
Assume that the said amounts were credited to Mr. Baranwal’s account in the books of Mr. Sahdev on
the same date. Mr. Baranwal’s turnover for F.Y.2023-24 was ₹15 crores.
A. Based on the above facts, examine the TDS/TCS implications, if any, under the Income-tax Act,
1961 for PY 2024-25.
B. Would your answer be different if Mr. Sahdev’s turnover for F.Y.2023-24 was ₹8 crores, with all
other facts remaining the same?
C. Would your answer to above change, if PAN has not been furnished by the buyer or seller, as
required?
[6 marks]
Answer A:
In this case, since both section 194Q and 206C(1H) applies, tax has to be deducted u/s 194Q.
• No tax is to be deducted u/s 194Q on the payments made on 1.6.2024 and 12.8.2024, since the
aggregate payments till that date i.e., ₹45 lakhs, has not exceeded the threshold of ₹50 lakhs.
• Tax of ₹1,700 [i.e., 0.1% of ₹17 lakhs (₹22 lakh – ₹5 lakhs, being the balance unexhausted
threshold limit)] has to be deducted u/s 194Q from the payment/ credit of ₹22 lakh on
23.11.2024.
• Tax of ₹2,800 (i.e., 0.1% of ₹28 lakhs) has to be deducted u/s 194Q from the payment/ credit of
₹28 lakhs on 25.3.2025.
Answer B:
TDS provisions under section 194Q would not be attracted. However, TCS provisions under section
206C(1H) would be attracted in the hands of Mr. Baranwal, since his turnover exceeds ₹10 crores in the
F.Y.2023 24 and his receipts from Mr. Sahdev exceed ₹50 lakhs.
• No tax is to be collected u/s 206C(1H) on 1.6.2024 and 12.8.2024, since the aggregate receipts
till that date i.e., ₹45 lakhs, has not exceeded the threshold of ₹50 lakhs.
• Tax of ₹1,700 [i.e., 0.1% of ₹17 lakh (₹22 lakh – ₹5 lakhs, being the balance unexhausted
threshold limits] has to be collected u/s 206C(1H) on 23.11.2024.
• Tax of ₹2,800 (i.e., 0.1% of ₹28 lakhs) has to be collected u/s 206C(1H) on 25.3.2025.
Answer C:
• In 1st case, Mr. Sahdev has to deduct tax @5%, instead of 0.1%. Accordingly, tax of ₹85,000 (i.e.,
5% of ₹17 lakhs) and ₹1,40,000 (5% of ₹28 lakhs) has to be deducted by Mr. Sahdev u/s 194Q
• In 2nd case, Mr. Baranwal has to collect tax@1% instead of 0.1%. Accordingly, tax of ₹17,000
(i.e., 1% of ₹17 lakhs) and ₹28,000 (1% of ₹28 lakhs) has to be collected by Mr. Baranwal u/s
206C(1H).
Q. 3 (b)
Write a short note on intra head adjustment of losses under the Income tax Act, 1961. (4 marks)
Answer : When the net result of any source of income is loss, it can be set off against income from any
other source under the same head. Sec. 70 deals with the set off of loss from one source against income
from another source under the same head of income, subject to the following exceptions –
i. Long term capital loss can be set off only against long term capital gain.
ii. Loss of a speculation business can be set off only against the profits of a speculation business,
under the head ‘Profits and gains of business or profession’.
iii. Loss of a specified business covered u/s 35AD can be set off only against the profits of other
specified business.
iv. Loss incurred in activity of owning and maintaining race horses can be set off against income
from such activity only [Sec. 74A]
v. Loss from a source, income of which is exempt u/s 10, cannot be set off against any income.
vi. No loss can be set off against winning from lotteries, crossword puzzles, races, card games,
gambling or betting, etc. [Sec. 58(4) & 115BB].
vii. Similarly, set off of losses is not permissible against unexplained income, investment, money,
etc. chargeable u/s 68 / 69A / 69B / 69C / 69D [Sec. 115BBE].
Q. 4 (a)
Ms. Shikakai, an Indian citizen and an MBA from Hogwards University, was employed in LFA LLP of
Country A since June, 2017. She came to India on 25.11.2024 and joined as CEO of fitbit Ltd. Ms. Shikakai
was in India before she left for overseas education in May, 2013 and was subsequently employed
outside India and never visited India thereafter. There is no income-tax in Country A. She has earned
interest income of ₹ 8,10,000 (net) in Country A and salary income from LFA LLP of ₹ 25 lakhs up to the
date of her return to India in the financial year 2024-25. Salary income (computed) of Ms. Shikakai from
fitbit Ltd. up to 31.03.2025 is ₹ 11,50,000 and she earned dividend of ₹ 5,00,000 from shares of an
Indian company. What would be the residential status of Ms. Shikakai and her total income for the A.Y.
2025-26?
[6 marks]
Answer:
DETERMINATION OF RESIDENTIAL STATUS OF MS. SHIKAKAI FOR THE A.Y. 2025-26
As per section 6(1), in order to be a resident of India in the P.Y.2024-25, Ms. Shikakai should satisfy
either of the following two conditions –
(1) Her stay in India should be for a period of 182 days or more in the P.Y.2024-25; or
(2) Her stay in India should be for a period of 60 days or more in the P.Y.2024-25 and for a period of 365
days or more in the four immediately preceding previous yea₹
Ms. Shikakai’s stay in India in the P.Y.2024-25 is 127 days (i.e., 6 days + 31 days +31 days + 28 days + 31
days). She left India in May, 2013 and never visited India thereafter. Her stay in India in the four
immediately preceding previous years would be Nil. Therefore, she does not satisfy either condition (1)
or condition (2) for being a resident.
As per section 6(1A), an individual who is a citizen of India would be deemed to be a resident of India if
his total income, other than income from foreign sources, exceed ₹ 15 lakh during the relevant previous
year and he is not liable to tax in any other country by reason of his domicile or residence or any other
criteria of similar nature.
Ms. Shikakai’s total income, other than income from foreign sources, would be ₹ 16,50,000 for A.Y.2025-
26 [Salary income from fitbit Ltd. [Computed] [Accrues or arises in India] ₹ 11,50,000 and Dividend from
shares of an Indian company [Accrues or arises in India] 5,00,000]
Since Ms. Shikakai is a citizen of India who is not liable to pay income-tax in Country A and her total
income, other than income from foreign sources, exceed ₹ 15 lakhs, she would be deemed resident in
India under section 6(1A) for A.Y.2025-26. A deemed resident is, by default, a resident but not
ordinarily resident.
In case of a resident but not ordinarily resident, income accrues or arises, deemed to accrue or arise and
received or deemed to be received in India, is taxable. In addition, Income which accrues or arises
outside India would also be taxable if it is derived from a business controlled in or a profession set up in
India.
MS. SHIKAKAI’S TOTAL INCOME FOR A.Y. 2025-26
Particulars ₹
Salary income from LFA LLP [Not taxable since it accrues or arises outside India] Nil
Salary income from fitbit Ltd. [Computed] 11,50,000
Interest income in Country A [Not taxable since it accrues or arises outside India] Nil
Dividend from shares of an Indian company 5,00,000
Total Income 16,50,000
Q. 4(b)
(i) Which are all persons required to mandatorily file the Return of Loss as per section 80 of Income
Tax Act, 1961.
(ii) Consequences of Non-filing of Return of Loss in time
[2+2 = 4 marks]
OR
Q. 4(b)
State persons who are required to apply for the allotment of PAN under section 139A(1) of the
Income-tax Act, 1961. Mention the time limit for making such application also. (4 Marks)
Answer:
First Alternative
(i) As per section 80, a person having the following losses is required to mandatorily file return of loss
u/s 139(3) on or before the due date specified u/s 139(1) for the purpose of carry forward of such
losses –
(a) Business loss u/s 72(1)
(b) Speculation business loss u/s 73(2)
(c) Loss from specified business u/s 73A(2) [In case assessee has exercised the option of shifting out of
the default tax regime provided under section 115BAC(1A)]
(d) Loss under the head “Capital Gains” u/s 74(1)
(e) Loss from the activity of owning and maintaining race horses u/s 74A(3).
(ii) If the return of loss is not filed within the time allowed u/s 139(1) then, the following losses cannot
be carried forward –
(a) Business loss u/s 72(1)
(b) Speculation business loss u/s 73(2)
(c) Loss from specified business u/s 73A(2) [In case assessee has exercised the option of shifting out of
the default tax regime provided under section 115BAC(1A)]
(d) Loss under the head “Capital Gains” u/s 74(1)
(e) Loss from the activity of owning and maintaining race horses u/s 74A(3)
Second Alternative
