ITRP|| MCQ ON SET OFF AND CARRY FORWARD OF LOSS UNDER THE INCOME-TAX

 

MCQ ON SET OFF AND CARRY FORWARD OF LOSS UNDER THE INCOME-TAX LAW

Q1. If income from a particular source is exempt from tax, then loss from such source cannot be set off against any other income which is chargeable to tax.

(a) True                                                                        (b) False

Correct answer : (a)

Justification of correct answer :

If income from a particular source is exempt from tax, then loss from such source cannot be set off against any other income which is chargeable to tax.

Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q2. The process of adjustment of loss from a source under a particular head of income against income from other source under the same head of income is called_____.

(a) Inter-head adjustment 

(b) Intra-head adjustment

(c) Carry forward of loss

(d) Clubbing of income

Correct answer : (b)

Justification of correct answer:

The process of adjustment of loss from a source under a particular head of income against income from other source under the same head of income is called intra-head adjustment.

Thus, option (b) is the correct option.

Q3. While making intra-head adjustment of loss, short-term capital loss cannot be set off against long-term capital gain.

(a) True                                                                        (b) False

Correct answer : (b)

Justification of correct answer :

While making intra-head adjustment of loss, short-term capital loss can be set off against short-term capital gain as well as against long-term capital gain.

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q4. While making intra-head adjustment,loss from the business of owning and maintaining race horses can be set off against ______only.

1. Income from winnings from lotteries
2. Income from crossword puzzles
3. Income from business of owning and maintaining race horses
4. Income from card game

Correct answer : (3)

Justification of correct answer :

Loss from the business of owning and maintaining race horses cannot be set off against any income other than income from the business of owning and maintaining race horses.

Thus, option (c) is the correct option.

Q5. While making inter-head adjustment of loss, loss from business and profession cannot be set off against income chargeable to tax under the head “Salaries”.

(a) True                                                         

   (b) False

Correct answer : (a)

Justification of correct answer :

While making inter-head adjustment of loss, loss from business and profession (including unabsorbed depreciation) cannot be set off against income chargeable to tax under the head “Salaries”.

Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q6. Loss under the head “Profits and gains of business or profession” can be carried forward even if the return of income/loss of the year in which loss is incurred is not furnished on or before the due date of furnishing the return, as prescribed under section 139(1).

(a) True                                                          

  (b) False

Correct answer : (b)

Justification of correct answer :

Loss under the head “Profits and gains of business or profession” can be carried forward only if the return of income/loss of the year in which loss is incurred is furnished on or before the due date of furnishing the return, as prescribed under section 139(1).

Thus, the statement given in the question is false and hence, option (b) is the correct option.

Q7. However, if loss under the head “Income from house property” cannot be fully adjusted in the year in which such loss is incurred, then unadjusted loss can be carried forward for____years immediately succeeding the year in which the loss is incurred.

(a) 2                                                                            

 (b) 5

(c) 8                                                                            

 (d) 10

Correct answer : (c)

Justification of correct answer :

With effect from the assessment year 2018-19, loss under the head “house property” shall be allowed to be set-off against any other head of income only to the extent of Rs. 2,00,000 for any assessment year.

If loss under the head “Income from house property” cannot be fully adjusted in the year in which such loss is incurred, then unadjusted loss can be carried forward for 8 years immediately succeeding the year in which the loss is incurred.

Thus, option (c) is the correct option.

Comment on incorrect answer :Option (c) is the correct option since it gives the correct number of years, all the other options, viz., option (a), (b) and (d) giving incorrect number of years are not correct.

Q8.Restriction of section 78 is applicable only in case of loss and is not applicable in case of adjustment of unabsorbed depreciation, unabsorbed capital expenditure on scientific research or family planning expenditure.

(a) True                                                            

(b) False

Correct answer : (a) Justification of correct answer :

Section 78 contains provisions relating to carry forward and set off of loss in case of change in constitution of a partnership firm due to death or retirement of a partner (i.e. when a partner goes out of firm by retirement or death). In such a case, the share of loss attributable to the outgoing partner cannot be carried forward by the firm. Restriction of section 78 is applicable only in case of loss and is not applicable in case of adjustment of unabsorbed depreciation, unabsorbed capital expenditure on scientific research or family planning expenditure.

Thus, the statement given in the question is true and hence, option (a) is the correct option.

Q9. In case of a Company, being a company in which public are not substantially interested but not being an eligible start-up as referred to in section 80-IAC, if the person beneficially holding___of the voting power as on the last day (i.e. 31st March) of the year in which the loss was incurred and on the last day (i.e. 31st March) of the year in which the company wants to set off the brought forward loss are different, then the company cannot set off such brought forward loss.

(a) 20%                                                            (b) 25%

(c) 50%                                                            (d) 51%

Correct answer : (d)

Justification of correct answer :

In case of a company in which public are not substantially interested (i.e., closely held company), if the person beneficially holding 51% of the voting power as on the last day (i.e. 31st March) of the year in which the loss was incurred and on the last day (i.e. 31st March) of the year in which the company wants to set off the brought forward loss are different, then the company cannot set off such brought forward loss.

Thus, option (d) is the correct option.

Set off and Carry forward of Losses Questions

Goods and Services Tax MCQ

1. Set of loss under the same head of income comes under section

 A) Sec 60
 B) Sec 70
 C) Sec 80

 D) None of the above








ANS : Sec 70

2. Set of loss against income under other heads of income under section......

 A) Sec 51
 B) Sec 61
 C) Sec 71
 D) None of the above

Answer is C)
Sec 71

 

3. Loss from the house property can be set off against ......

 A) Business profession
 B) Capital gains
 C) Salaries
 D) All of the above

Answer is D)
All of the above

 

4. Long term capital gain can be carried forward for

 A) 8 subsequent assessment years
 B) Indefinitely
 C) 6 years
 D) None of the above

Answer is A)
8 subsequent assessment years

  5. Short term capital loss can be set off in the same assessment year from

 A) Long term capital gains
 B) Short term capital gold
 C) Both
 D) None of the above

Answer is C)
Both

 

6. Loss from specified business can be set off

 A) Income other than salary
 B) Any head of income
 C) Profits of any other specified business only
 D) None of the above

Answer is C)
Profits of any other specified business only

7. Compulsory filing of loss return has been defined u/s

 A) 80
 B) 70
 C) 60
 D) None of the above

Answer is A)
80

 

8. Carry forward and set off of capital losses comes under section

 A) 74(1) & (2)
 B) 73(1) & (2)
 C) 71(1) & (2)
 D) None of the Above

Answer is A)
74(1) & (2)

 

9. The share of loss from a from cannot be set off by a partner against his.....income

 A) Gross
 B) Total
 C) Individual
 D) None of the above

Answer is C)
Individual

 

10. Loss from house property can be set off only up to ..... From any head on income

 A) 2,50,000
 B) 2,00,000
 C) 3,00,000
 D) None of the Above

Answer is B)
2,00,000

11. Loss from business can’t be set off against…

A. salaries

B. business and profession

C. capital gain

D. None of the above

12. Loss of partnership firm can be set-off only against…

A. salaries

B. capita gain

C. firm

D. None of the above

13. Capital loss can be carried forward for a maximum period of …

A. 4 subsequent year assessment year

B. 8 subsequent year assessment year

C. 10 subsequent year assessment year

D. None of the above

14. The loss in speculation business can be carried forward only for a maximum period of…

A. 4 subsequent year assessment year

B. 8 subsequent year assessment year

C. 2 subsequent year assessment year

D. None of the above

15. long term capital loss can be adjusted only against

A. short term capital gain

B. long term capital gain

C. both the above

D. None of the above

16. Unabsorbed depreciation can be carried forward for a period of …

A. 8 year

B. 4 year

C. indefinite

D. None of the above

17. Loss from the business of owning and maintaining race horses can be carried forward for a period of…

A. 4 subsequent year assessment year

B. 8 subsequent year assessment year

C. indefinite subsequent year assessment year

D. None of the above

18. Losses of discontinued business of an industrial undertaking after re-establishment or revival can be carried forward up to…

A. 4 subsequent year assessment year

B. 8 subsequent year assessment year

C. indefinite subsequent year assessment year

D. None of the above

19. Treatment of losses after succession comes under

A. sec 78(2)

B. sec 77(2)

C. sec 76(2)

d. None of the above

20 . Loss from other sources can be carried forward for …. Subsequent year

A. 4 year

B. 8 year

C. No carried forward

D. None of the above