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CA Intermediate · Taxation · Provisions for filing Return of Income and Self Assessment

Sunita, a resident individual running a small trading business, has for tax year 2026-27 a current-year business loss of Rs 4,00,000 (computed after current depreciation) and unabsorbed current depreciation of Rs 1,50,000 that could not be absorbed in that business. She has no other income. She files her return on 20 December 2027, after the due date but within the time allowed for a belated return. What amount can she carry forward to future tax years?

Sunita can carry forward only Rs 1,50,000. The business loss of Rs 4,00,000 cannot be carried forward because the return was filed after the due date, but unabsorbed depreciation is allowed to be carried forward even where the return is belated.

  1. ANil, because the return was filed late
  2. BRs 1,50,000 onlyCorrect
  3. CRs 4,00,000 only
  4. DRs 5,50,000

Explanation

A business loss can be carried forward only if the return is filed by the due date. Unabsorbed depreciation is exempt from this condition and may be carried forward even when the return is belated. So Rs 4,00,000 of business loss is lost, but Rs 1,50,000 of unabsorbed depreciation survives. Rs 5,50,000 wrongly treats both as carried forward.

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