Mr. Sahil set-up a three-star hotel “Cloud View” in Bhopal on 16.5.2009 and another three-star hotel "Green View" in Mumbai on 1.4.2012. His brother…

CA Final · Direct Tax Laws and International Taxation · MTP · May 2024
Mr. Sahil set-up a three-star hotel “Cloud View” in Bhopal on 16.5.2009 and another three-star hotel "Green View" in Mumbai on 1.4.2012. His brother Mr. Akhil is in the business of building and operating hospitals. He has set-up hospital "Lifeline” (with 50 beds capacity) in Mumbai which begins to operate on 1.8.2008 and another hospital “Lifecare” (with 120 beds capacity) in Bhopal which begins to operate on 15.5.2016. For the previous year, 2023-24, Mr. Sahil has profit from hotel “Cloud View” of 95 lakhs and loss from hotel “Green View” of 35 lakhs. Mr. Akhil has profit from Hospital “Lifeline” of 54 lakhs and loss from hospital "Lifecare” of 25 lakhs for the P.Y. 2023-24. What would be the profits and gains from business or profession of Mr. Sahil and Mr. Akhil and also determine the loss to be carried forward, if both of them opt out to pay tax as per section 115BAC?
(A) Business income of 60 lakhs in the hands of Mr. Sahil and amount to be carried forward would be Nil. Business income of 54 lakhs in the hands of Mr. Akhil and 25 lakhs loss to be carried forward.
(B) Business income of 95 lakhs in the hands of Mr. Sahil and 35 lakhs loss to be carried forward. Business income of 29 lakhs in the hands of Mr. Akhil and no amount to be carried forward.
(C) Business income of 60 lakhs in the hands of Mr. Sahil and amount to be carried forward would be Nil. Business income of 29 lakhs in the hands of Mr. Akhil and no amount to be carried forward.
(D) Business income of 95 lakhs in the hands of Mr. Sahil and 35 lakhs loss to be carried forward. Business income of 54 lakhs in the hands of Mr. Akhil and 25 lakhs to be carried forward.

Suggested Answer and Working Notes:

Correct Answer: Option (A)

Business income of 60 lakhs in the hands of Mr. Sahil and amount to be carried forward would be Nil. Business income of 54 lakhs in the hands of Mr. Akhil and 25 lakhs loss to be carried forward.

Topics: Transfer Pricing, Double Taxation Relief, Non-Resident Taxation

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