Unit 3: Carry Forward and Set-off of Losses - Practice Quiz

1 For how many assessment years can a company's normal business loss generally be carried forward?

2 A carried-forward normal business loss can generally be set off against which income?

3 For how many assessment years can a speculation business loss generally be carried forward?

4 A carried-forward speculation loss can be set off against which type of income?

5 For how many assessment years can a company's capital loss generally be carried forward?

6 A carried-forward short-term capital loss may be set off against which gains?

7 A carried-forward long-term capital loss can be set off against which income?

8 For how long can unabsorbed depreciation generally be carried forward by a company?

9 Which item is generally given priority when both brought-forward business loss and unabsorbed depreciation are available for set-off?

10 What is generally required for carrying forward a normal business loss?

11 Which loss may generally be carried forward even if the return is not filed within the due date under Section 139(1)?

12 For how many assessment years can a loss from house property generally be carried forward?

13 A carried-forward loss from house property can be set off against which income?

14 Which section generally restricts the carry forward of losses when there is a substantial change in the shareholding of certain closely held companies?

15 Under the general rule of Section 79, what minimum percentage of voting power should continue to be beneficially held by the relevant shareholders?

16 Section 79 primarily applies to which category of company?

17 Which section contains provisions relating to the carry forward and set-off of accumulated loss and unabsorbed depreciation in certain cases of amalgamation?

18 In a qualifying amalgamation under Section 72A, the eligible accumulated loss of the amalgamating company is generally treated as the loss of which company?

19 A loss from a specified business covered by Section 35AD can generally be set off against which income?

20 For how long can an eligible loss from a specified business under Section 73A generally be carried forward?

21 A company incurs a normal business loss of lakh in Assessment Year 2025–26. It files its return of loss within the prescribed due date. For how long can the company generally carry forward this loss?

22 A company has a brought-forward business loss of lakh and current-year business profit of lakh. Ignoring other adjustments, what amount of business loss remains available for future carry forward?

23 Which condition is generally required for a company to carry forward a business loss under the normal provisions?

24 A company has a current-year business loss of lakh and unabsorbed depreciation of lakh. It earns business profit of lakh in the same year. Assuming no other adjustments, what amount is taxable after the relevant set-offs?

25 Which statement correctly distinguishes unabsorbed depreciation from a normal business loss?

26 A company has a brought-forward business loss of lakh and current-year depreciation of lakh. Its current-year business profit before depreciation is lakh. What amount remains after these adjustments?

27 Company A, a company in which the public are not substantially interested, has a brought-forward business loss. During the year, shareholders holding 60% of voting power are replaced. What is the likely consequence under Section 79?

28 For a closely held company, what continuity is generally relevant for preserving carry forward of an earlier business loss under Section 79?

29 A closely held company changes its shareholders, but the same group continues to hold 55% of the voting power as in the loss year. Assuming no other issue, what is the likely result under Section 79?

30 A company has a speculation loss of lakh and a non-speculative business profit of lakh in the same year. How much of the speculation loss can generally be set off?

31 A company incurs a speculation loss of lakh and earns speculation profit of lakh in the following year. What amount of speculation loss remains for future carry forward?

32 Under the general rule, for how many assessment years can a speculation loss be carried forward?

33 A company has a short-term capital loss of lakh and a long-term capital gain of lakh. What is the permitted set-off under the general capital-loss rules?

34 A company has a long-term capital loss of lakh and a short-term capital gain of lakh. What is the correct treatment?

35 A company has a long-term capital loss of lakh and long-term capital gain of lakh. What amount of long-term capital loss remains after set-off?

36 A company incurs a loss from a specified business covered by Section 35AD. Against which income can this loss generally be set off?

37 A company has a specified-business loss of lakh and specified-business profit of lakh in the next year. What amount remains available for carry forward?

38 A company has a loss from trading in shares. Under the general rule for companies, such loss may be treated as:

39 A company has a brought-forward normal business loss of lakh and current-year depreciation of lakh. Its current-year business profit before depreciation is lakh. What amount of business loss remains after the adjustments?

40 A company has a current-year business loss of lakh, brought-forward unabsorbed depreciation of lakh, and current-year business profit of lakh before these adjustments. Assuming the business loss is adjusted first, what income remains?

41 A company has a non-speculative business loss of lakh and a speculative business profit of lakh in the same previous year. It also has income from house property of lakh. Ignoring other provisions, what is the correct set-off position?

42 A closely held company incurred a business loss in Assessment Year 2022–23. The prescribed return was filed after the due date under section 139(1), but before completion of assessment. Can the company carry forward the loss under section 72?

43 A company has the following losses brought forward: business loss of lakh from AY 2018–19, business loss of lakh from AY 2020–21, and long-term capital loss of lakh from AY 2021–22. In AY 2024–25, it earns business income of lakh and long-term capital gain of lakh. What is the maximum amount of brought-forward loss that can be set off, assuming all losses remain valid?

44 A company has a short-term capital loss of lakh and a long-term capital loss of lakh brought forward. During the current year, it earns a short-term capital gain of lakh and a long-term capital gain of lakh. What is the correct set-off?

45 A company incurred a specified-business loss under section 73A in AY 2019–20. It has no specified-business income until AY 2028–29, when it earns specified-business profit. What is the applicable treatment of the loss?

46 A company carries on share trading as one of several activities. Its gross total income, before giving effect to the share-trading loss, consists mainly of interest and capital gains. How is the share-trading loss generally treated under section 73?

47 A company’s principal business is granting loans and advances. It incurs a loss from purchase and sale of shares. What is the treatment of that loss under the Explanation to section 73?

48 A company has speculative loss of lakh from AY 2021–22 and speculative profit of lakh in AY 2024–25. It also has ordinary business profit of lakh in AY 2024–25. What amount of speculative loss remains after the current-year set-off?

49 A company has a business loss of lakh, unabsorbed depreciation of lakh, and current-year business profit of lakh. Ignoring other deductions, what amount remains taxable after applying the usual set-off sequence?

50 Which statement correctly distinguishes unabsorbed depreciation from a business loss carried forward by a company?

51 In a closely held company, persons holding 60% of the voting power in the loss year retain only 48% in the year of set-off. The remaining shares are acquired by unrelated investors. What is the likely consequence under section 79?

52 A closely held company changes its shareholding during the year. The same persons beneficially hold 52% of voting power on the last day of the loss year and 52% on the last day of the set-off year, although the identity of the remaining shareholders changes completely. What is the section 79 position?

53 A company whose resolution plan is sanctioned under the Insolvency and Bankruptcy Code seeks to use losses carried forward from before the resolution process. The post-resolution investors do not satisfy the normal 51% continuity test. Which conclusion is most accurate?

54 A company has a business loss from AY 2017–18 and does not use it until AY 2025–26. Assuming the return and ownership conditions were satisfied, what is the normal status of the loss?

55 A company has a business loss from AY 2017–18 and does not use it until AY 2025–26. Assuming the return and ownership conditions were satisfied, what is the normal status of the loss?

56 An amalgamated company claims the accumulated business loss of the amalgamating company under section 72A. The amalgamated undertaking is discontinued immediately after amalgamation. Which condition is most directly affected?

57 A company has both current-year business loss and brought-forward business loss. It also has current-year depreciation. Which sequence best reflects the normal computation approach?

58 A company files a loss return within the prescribed due date and reports a non-speculative business loss, a speculative loss, and a capital loss. Which losses are generally subject to the section 80 filing requirement for carry-forward purposes?

59 A company earns current-year speculative profit of lakh and has brought-forward speculative loss of lakh. It also incurs a current-year non-speculative business loss of lakh. What amount of speculative loss is carried forward, assuming no other adjustments?

60 A company has a short-term capital loss of lakh and no capital gains in the current year. In the next year it earns long-term capital gain of lakh and short-term capital gain of lakh. How much of the loss can be set off in the next year?