Law: Income Tax Ordinance, 1979

Section: 35,34

(a) Income-tax Ordinance (XXXI of 1979)---Ss. 35 & 34--Carrying forward of business loss--Income from business or profession--When an assessee sustains a loss in any assessment year under head "income from business or profession" and the loss cannot be wholly .set off under S. 34, so much of the loss as has not been set off, or the whole loss where the assessee has no income under any other head shall be carried forward to the following assessment year to tie set off against profits and gains, if any of such business or profession 'assessable for that year if such business or profession continues to be carried on by the assessee for that assessment year and if the loss cannot be wholly set off in such manner the amount of loss not so ,Set off shall be carried forward to the following assessment year and so forth but not going beyond six assessment years--Where the assessee carried on "same business or profession" which he carried on earlier and in which he suffered losses which were carried forward, provisions of S. 35 would apply with full force. Commissioner of Income-tax, Lahore Zone, Lahore v. Muhammad Allah Bux 1977 P T D 13 ref. (b) Income-tax Ordinance (XXXI of 1979)-- ---Ss. 35 & 34--Loss--Set off--Carrying forward of business loss-­Activities which constituted carrying on business--Nature and scope. The activities, which constituted carrying on business need not necessarily consist of activities by way of trade, commerce or manufacture or activities in the exercise of profession or vacation. They may even consist of rendering services to others, which services may be of a variegated nature. It is the nature and scope of these activities and not the extent of operation, which are relevant for the purposes of determining as to whether the income was from business or from property or from any other source. Where a company acquired properties which it sold or leased out with a view to acquire other properties to be dealt with in the same manner, the company was not treating them as properties to be enjoyed in the shape of rents which they yielded but as a kind of circulating capital leading to profits of business, which profits may be either…

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