• Shruti Sharma

72. Carry forward and set off of business losses.

Updated: Sep 30

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Section 72(1)

Where for any assessment year, the net result of the computation under the head “Profits and gains of business or profession” is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and—

  • it shall be set off against any profits or gains derived from any business or profession carried on by him and assessable for that assessment year;

  • if the loss cannot be entirely set off, the amount not so set off shall be carried forward to the next assessment year, and so on:

Provided, however, that where the whole or any part of such loss is sustained in any such business as is referred to in section 33B and is discontinued in the circumstances specified in that section, and such business is re-established, reconstructed, or revived by the assessee at any time before the expiry of the period of three years referred to in that section, so much of the loss as is attributable to such business shall be carried forward to the assessment year relevant to the previous year in which the business is so re-established, reconstructed or revived, and—

  • It shall be taken against against the income and gains of that business or any other business carried on by him that are assessable for that assessment year;

  • If the loss cannot be entirely set off, the amount of loss not so set off shall be carried forward to the following assessment year, and so on for seven assessment years immediately thereafter, if the business thus re-established, reconstructed, or resurrected continues to be carried on by the assessee.

Section 72(2)

The conditions of this section must be followed before applying any allowance or portion of an allowance under subsection (2) of section 32 or subsection (4) of section 35.


Section 72(3)

No loss may be carried forward under this section for more than eight assessment years immediately following the assessment year for which the loss was initially computed, with the exception of the loss mentioned in the proviso to sub-section (1) of this section.

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