Answer

1. F

   Facts

   An F&O loss is a non-speculative business loss. It can be set off against other income in the same year except salary, and carried forward for 8 years against business income, if the return is filed by the due date.

2. P

   Provisions and law

   • Sec 71, Income-tax Act 1961 (now Sec 109, Income-tax Act 2025)Loss under one head can be set off against other heads, but business loss not against salary
   • Sec 72, Income-tax Act 1961 (now Sec 112, Income-tax Act 2025)Business loss can be carried forward for 8 years against business income
   • Sec 80, Income-tax Act 1961 (now Sec 121, Income-tax Act 2025)Losses can be carried forward only if the loss return was filed by the due date
3. A

   Analysis

   Example: salary ₹12 lakh, FD interest ₹50,000 and F&O loss ₹2 lakh. The loss is set off against the ₹50,000 interest, and ₹1.5 lakh is carried forward. It cannot reduce the ₹12 lakh salary. Carry forward needs an on-time return under Sec 80 (now Sec 121); in later years the loss can be set off only against business income.

4. C

   Conclusion

   1. 1Compute the F&O loss
   2. 2Set off against non-salary income in the same year
   3. 3Carry forward the balance in schedule CFL
   4. 4File by the due date to keep the loss
   5. 5Track the loss year by year

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