Q4 Income tax and Laws SOL DU

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 Carry Forward and Set Off of Loss from House Property [Section 71B]

A loss under the head house property, if could not be set off or was not wholly set off in the same assessment year from other heads of income, will be allowed to be carried forward for 8 assessment years to claim it as a set off in the subsequent years under the head 'Income from house property'. Therefore, if the loss of house property of the previous year 2016-17 which could not be set off because of—

  1. absence of income under other head, or
  2. loss under the head house property being more than Rs. 2,00,000 in the previous year, or
  3. inadequacy of the income under other head,

it may be carried forward for 8 assessment years succeeding assessment year 2017-18 (i.e. assessment years 2018-19 to 2025-26) to be set off from income under the head house property.

Carry Forward and Set Off of Loss from Capital Gains
Section 74 provides that where for any assessment year, the net result under the head ‘Capital gains’ is short term capital loss or long term capital loss, the loss shall be carried forward to the following assessment year to be set off in the following manner:

(i) Where the loss so carried forward is a short term capital loss, it shall be set off against any capital gains, short term or long term, arising in that year.

(ii) Where the loss so carried forward is a long term capital loss, it shall be set off only against long term capital gain arising in that year.

(iii) Net loss under the head capital gains cannot be set off against income under any other head.

(iv) Any unabsorbed loss shall be carried forward to the following assessment year up to a maximum of 8 assessment years immediately succeeding the assessment year for which the loss was first computed.

 

Section 64(1)(ii)- Remuneration of spouse from a concern in which the other spouse has substantial interest;

In computing total income of such individual, there shall be included all such sums as arise directly or indirectly to the spouse, of such individual by way of salary, commission or in any other form, whether in cash or kind from a concern in which such individual has substantial interest.

Thus, income of a souse in any form from a concern shall be clubbed in the income of other spouse, which have substantial interest in the concern.

No clubbing of income if remuneration received on the basis of any technical or professional qualification; – if spouse has any technical or professional qualification and due to that he/she is earning any income from a concern in which other spouse has substantial interest, then her/his income shall be clubbed. For these two conditions to be fulfilled;

i) Income received on account of technical or professional qualifications possessed by the spouse, and

ii) The income is solely attributable to the application of his/her technical or professional knowledge or experience.

 

Section 64(1)(ii)- Where both husband and wife have substantial interest and both are getting remuneration from the concern:- if both husband and wife have substantial interest in the concern and both getting remuneration from same concern, then income of one shall be clubbed income of those, which has higher income than other, before clubbing income. For this below mentioned conditions to be fulfilled;

i) Both husband and wife have substantial interest in the concern;

ii) Both husband and wife get remuneration from such concern;

iii) The relationship of husband and wife subsists at the time of accrual of income from concern.

In case of a company, the individual must have beneficial ownership of 30% of Equity Shares. If a person holding more than 51% shares of a company, in which he/she is not beneficially interested, then he/she shall not be deemed to have substantial interest in the concern.

Two main conditions required to be fulfilled for Section 64(1)(ii) as follows;

i) The spouse possesses technical or professional qualification; and

ii) The income is solely attributable by application of same technical/professional qualifications.

 

In the given case mrs. x have substantial right in  b Ltd so as per provision of clubbing sec 64(1)(ii) the income of mrx clubbed with mrsx

 

 

 

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