Question

Difference between capital losses and revenue losses in income tax

Answer 1

HERE IS YOUR ANSWER

• Loss due to sale of assets. Where there is loss on selling a capital asset, it is a capital loss whereas any loss incurred during the sale of stock-in-trade is a revenue loss.
• Loss due to embezzlement. Where there is embezzlement done by an employee and this causes loss to the business, it is of revenue nature. from bank. Once the amount is deposited in bank and then it is withdrawn by an employee and is misappropriated, it is capital loss.
• Loss due to Liquidation of Company : Amount deposited by a person with manufacturing industry to get its agency and lost due to company being liquidated is a Capital Loss..
• Loss due to Theft by an employee. : Loss occurring due to theft or embezzlement or misappropriation committed by an employee is revenue loss.

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