SET OFF OF LOSS UNDER THE SAME HEAD OF INCOME – Section 70
Losses Can be Adjusted:
The loss in respect of any source of income under any head other than ‘capital gains’ of income shall be set off against the income from any other source under the same head.
Losses Can Not be Adjusted:
In the following cases loss from one source cannot be adjusted against income from other source although it falls under the same head:
- Losses from Speculation Business: Any loss in respect of speculation business cannot carried on by an assessee, shall be set off only against income of another speculation business.
- Losses from the activity of owning and maintaining race-horses: It can be set off against the income of such activity and cannot be set off against the income from any other source.
- Long term Capital loss cannot be set off against short term capital gains.
- Loss of specified business referred to in Section 35AD cannot be SET OFF except against profits and gains of any other specified business referred to in Section 35AD.
- Loss from a source which is exempt: Loss incurred from a source, the income of which is exempt income, cannot be set off against the income from a taxable source
- Loss on account of lottery, etc.: Loss from any lottery, card games etc. is not allowed to be set off at all against any other income, not even against income of another winnings of lotteries, crossword puzzles, card games etc.
- Bonus stripping