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

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

The correct answer is A, B, D only

Key Points Business Income:

Business income may include income received from the sale of products or services.

Income Tax is chargeable on the profit earned by the business.

Important Points  Income tax slabs for businesses in India:

  • Income up to Rs. 2.5L- NIL
  • Income between Rs. 2.5-5L lakh- 5%
  • Income between Rs. 5-10L- 20%
  • Income above Rs. 10L - 30%

Business Loss Not Allowed under Income Tax:

The following types of business loss are not deductible from business income:

  • 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 which is not incidental to the carrying on of the business of the assessee.
  • Loss due to the sale of securities held as investments as it will be a capital loss and not the business loss.
  • Loss caused by forfeiture of advance given for the purchase of capital assets.

Additional Information Business Losses Deductible under Income Tax:

The following types of business loss are considered to be incidental to the business and are deductible under the Income Tax Act:

  • Loss on account of embezzlement by an employee is allowed as a deduction in the year in which such embezzlement is discovered.
  • Loss of stock-in-trade by fire or other natural calamities or due to the negligence of employees is deductible.
  • Loss on account of robbery or theft provided it is in the course of business and incidental to the trade is deductible.
  • Loss caused on account of fluctuation in the exchange rate at the time of remitting the money for the purchase of raw materials is deductible.
  • Loss caused due to non-recovery of advances made in the course of business, providing it is a trading loss is deductible under the Income Tax Act.
  • Loss caused due to a breach of contract for the delivery of goods by either party is deductible.
  • Loss of raw material or finished goods in transit is tax-deductible.

Related Questions

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:
In the question below is given a statement followed by two courses of action numbered I and II. You have to assume everything given in the statement to be true and then decide which of the given/ suggested courses of action logically follows for pursuing. Statement: One of the problems of the public food- processing industry is the irregular supply of raw material to other industries also. Courses of Action:  The government should deregulate the supply of raw material for the food processing industry. The government should announce an attractive package to ensure regular supply of raw material. The producers of raw material are not getting a reasonable price
Which one of the following is the correct sequence of various stages of operating cycle of a manufacturing company?  1. Raw material conversion period, work-in-progress conversion period, Finished goods conversion period, Receivables conversion period 2. Raw material conversion period, work-in-progress conversion period, Creditors payment period, Receivables conversion period 3. Creditor payment period. Raw material conversion period, Receivables conversion period, work-in- progress conversion period 4. Raw material conversion period, Finished goods conversion period, work-in- progress conversion period. Receivables conversion period 
Consider the following pairings of Non-Performing Assets (NPA) classification in India with their descriptions: 1. Substandard assets : Assets which have remained NPAs for a period less than or equal to 12 months. 2. Doubtful assets : Assets which have remained in the substandard category for a period of 12 months. 3. Loss assets : Assets which are considered uncollectible and of such little value that their continuance as a bankable asset is not warranted, although there may be some salvage or recovery value. Which out of the above pairings are correct?
Given below are four jumbled sentences. Out of the given options pick the one that gives their correct order. A. So, in the agrarian era, you destroy your enemy’s productive capacity by burning his crops or fields. B. Now, in the information era, destroying the enemy’s productive capacity means destroying their information infrastructure. C. You battle with your enemy by destroying the enemy’s productive capacity, which will be different depending upon the foundation of economy. D. But in the industrial era, ending productive capacity meant bombing of the factories that are located in cities and main industrial areas.
Statement : One of the problems facing the food processing industry is the irregular supply of raw material. The producers of raw material are not getting a reasonable price.

Courses of Action :
I. The government should regulate the supply of raw material to other industries also.
II. The government should announce an attractive package to ensure regular supply of raw material for food processing industry.
In the following question, sentences of a paragraph have been jumbled and labelled as A, B, C, and D. You are required to rearrange the jumbled sentences of the paragraph and mark your response accordingly by selecting the correct option. A: Per capita income (PCI) or average income measures the average income earned per person in a given area (city, region, country, etc.) in a specified year. B: It is calculated by dividing the area's total income by its total population. C: Per capita income is national income divided by population size.  D: Per capita income is often used to measure a sector's average income and compare the wealth of different populations.
Consider the following statements.
1. In case of standard assets, provision for NPA must be 25% for all types of standard assets.
2. In case of sub-standard assets, provision for NPA must be 10% for all types of standard assets.
3. In case of doubtful assets, 100% provision is required for unsecured and secured advances.
4. In case of loss assets, 10% of unsecured and 100% of secured advance must be kept as provision for NPAs.
Which of the statement(s) given above is/are correct?
Which of the following rules stands true while preparing a schedule of changes in working capital? (A) An increase in current assets increases working capital (B) An increase in current assets decreases working capital (C) An increase in current liabilities decreases working capital (D) An increase in current liabilities increases working capital Choose the most appropriate answer from the options given below:
John, Jack, Joseph and Jordan participated in a running race. Only the winner finished the race in 10 minutes. Which two pieces of information can tell you who the winner was? (i) John finished the race in 16 minutes . (ii) Joseph finished the race earlier than Jack by 2 minutes. (iii) Jack finished the race later than Jordan by 4 minutes. (iv) Jordan finished the race earlier than John by 6 minutes. (v) John finished the race later than Joseph by minutes.