CAF-2 · Chapter 13 · Question 7 of 15
Mr. Junaid has a foreign-source business loss of Rs. 800,000 and a foreign-source property income of Rs. 1,000,000 during the same tax year. How will this loss be treated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) B) The business loss cannot be set off against the property income and must be carried forward to be set off against future foreign-source business income.
Explanation
Deductible expenditures incurred by a person in deriving foreign-source income chargeable to tax under a head of income shall be deductible only against that specific income. Therefore, a foreign business loss cannot be adjusted against foreign property income.
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