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CMA Intermediate · Direct and Indirect Taxation · Filing of Return of Income

Anita, an individual, incurred a loss under the head capital gains for the tax year and wishes to carry it forward. Her total income is below the maximum amount not chargeable to tax. Which statement is correct under section 263?

Anita must file a return, because section 263(1)(a)(viii) obliges any person with a loss under business or profession or under capital gains who intends to carry it forward to furnish a return, whatever her total income is relative to the exemption limit.

  1. AShe need not file, as her income is below the exemption limit
  2. BShe must file a return, as she has a capital gains loss she intends to carry forwardCorrect
  3. CShe must file only if the loss is under business or profession, not capital gains
  4. DShe may file only an updated return

Explanation

Section 263(1)(a)(viii) obliges a person who has sustained a loss under business or profession or under capital gains and intends to carry it forward to file a return. The exemption-limit test applies to clause (iii) and does not override this. Capital gains losses are expressly included.

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