Which of the following losses are not deductible from business income? 1. Loss sustained before the…
While computing income under 'Profits and Gains of Business or Profession' (PGBP), losses sustained prior to the commencement of business (1), losses incurred in closing…
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Which of the following losses are not deductible from business income?
1. Loss sustained before the business is commenced.
2. Losses incurred in the closing down of the business.
3. Loss incurred due to damage, destruction etc. of capital assets.
4. Loss of raw material and finished goods in transit.
5. Loss of stock-in-trade due to enemy action.
Answer and explanation
Correct answer A
While computing income under 'Profits and Gains of Business or Profession' (PGBP), losses sustained prior to the commencement of business (1), losses incurred in closing down the business (2), and capital losses from damage or destruction of fixed capital assets (3) are capital in nature and NOT deductible. Conversely, losses of raw materials or finished goods in transit (4) and loss of stock-in-trade due to enemy action (5) are revenue trading losses and are fully deductible.
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UGC NET Commerce