Which of the following losses are not deductible from business income? (A) Loss sustained before the business is commenced. (B) Lossess incurred in the closing down of the business. (C) Loss incurred due to damage, destruction, etc., of capital assets. (D) Loss of raw material and finished goods in transit. (E) Loss of stock-in-trade due to enemy action. Choose the correct answer from the options given below:

Which of the following losses are not deductible from business income? (A) Loss sustained before the business is commenced. (B) Lossess incurred in the closing down of the business. (C) Loss incurred due to damage, destruction, etc., of capital assets. (D) Loss of raw material and finished goods in transit. (E) Loss of stock-in-trade due to enemy action. Choose the correct answer from the options given below: Correct Answer A, B, C only

The correct answer is A, B, C only

Key Points Business Loss Setoff:

• Taxpayers' previous year's business losses can be offset against the current year's taxable revenue.
• The Income Tax Act provides for such changes in accordance with natural justice principles.
• As a result, the Income Tax Act includes provisions for company losses.

Important Points Business Losses Deductible under Income Tax:

• The loss incurred as a result of an employee's embezzlement is allowable as a deduction in the year in which the embezzlement is discovered.
• Stock-in-trade losses caused by fire or other natural disasters, as well as employee negligence, are deductible.
• Robbery or theft losses are deductible if they occur in the course of business and are incidental to the trade.
• Losses incurred as a result of exchange rate fluctuations while remitting funds for the acquisition of raw materials are deductible.
• Losses incurred as a result of non-recovery of advances given in the course of business are deductible under the Income Tax Act if they are trading losses.
• Loss incurred as a result of a violation of contract for the delivery of goods.

Business Loss Not Allowed under Income Tax:

• Losses sustained before the business is commenced
• Losses incurred in the closing down of a business.
• Losses incurred due to damage, destruction, etc., of capital assets.
• A loss that is not incurred as a result of the assessee's business operations.
• The loss incurred as a result of the sale of securities held as investments will be a capital loss rather than a business loss.
• Loss resulting from the forfeiture of a loan for the purchase of capital assets.
• Violation of the law is not a common occurrence in business, and an expense incurred as a result of a penalty for breaking the law is not deductible as a business loss.
• In the usual course of business, there is a trading loss owing to the loss of products in transit.