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Set off of losses under the same head of income – Sec 70

U.C Date : 25 Feb 2015

If there is a loss from any source of income under any head, then it is to be set off against income from any other source under the same head. The exceptions to this rule are

  • Loss from speculation business- Loss in speculation business can be set off only against the profit in a speculation business.
  • Long term capital loss – Long term capital loss can be set off only from long term capital gain.
  • Loss from speculation business – Any loss from any specified business u/s 35AD shall not be set off except against profits and gains of any other specified business.
  • Loss from activity of owning and maintaining horse race – Loss from business of owning and maintaining horse race can be set off only against profit from such business.
  • Loss cannot be set off against winning from lotteries, crossword puzzles etc. [Sec 58(4)] – a loss cannot be set off against winnings from lotteries, crossword puzzles, races including horse races, card games or games of any other sort or gambling or betting of any form or nature.

Bare Act for Sec 70

Bare Act for Sec 70

(1) Save as otherwise provided in this Act, where the net result for any assessment year in respect of any source falling under any head of income, other than “Capital gains”, is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head.

(2) Where the result of the computation made for any assessment year under sections 48 to 55 in respect of any short-term capital asset is a loss, the assessee shall be entitled to have the amount of such loss set off against the income, if any, as arrived at under a similar computation made for the assessment year in respect of any other capital asset.

(3) Where the result of the computation made for any assessment year under sections 48 to 55 in respect of any capital asset (other than a short-term capital asset) is a loss, the assessee shall be entitled to have the amount of such loss set off against the income, if any, as arrived at under a similar computation made for the assessment year in respect of any other capital asset not being a short-term capital asset.

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