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    (Section 71) - Set Off of Loss From One Head Agains

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    sukantabera215
    This document discusses the set off of losses from one head of income against income from another head under Section 71 of the Income Tax Act. It states that if after setting off losses within the same head, the net result is a loss, that loss can be set off against income from another head, except for capital gains. It also specifies that losses from house property up to Rs. 200,000, capital gains losses, and business losses from a salary source cannot be set off in the described manner. An example is provided to illustrate setting off losses across different heads.

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    (Section 71) - Set Off of Loss From One Head Agains

    Uploaded by

    sukantabera215
    16 views2 pages
    This document discusses the set off of losses from one head of income against income from another head under Section 71 of the Income Tax Act. It states that if after setting off losses within the same head, the net result is a loss, that loss can be set off against income from another head, except for capital gains. It also specifies that losses from house property up to Rs. 200,000, capital gains losses, and business losses from a salary source cannot be set off in the described manner. An example is provided to illustrate setting off losses across different heads.

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    [Section 71]- Set Off of Loss from one head agains

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    This document discusses the set off of losses from one head of income against income from another head under Section 71 of the Income Tax Act. It states that if after setting off losses within the same head, the net result is a loss, that loss can be set off against income from another head, except for capital gains. It also specifies that losses from house property up to Rs. 200,000, capital gains losses, and business losses from a salary source cannot be set off in the described manner. An example is provided to illustrate setting off losses across different heads.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    16 views2 pages

    (Section 71) - Set Off of Loss From One Head Agains

    Uploaded by

    sukantabera215
    This document discusses the set off of losses from one head of income against income from another head under Section 71 of the Income Tax Act. It states that if after setting off losses within the same head, the net result is a loss, that loss can be set off against income from another head, except for capital gains. It also specifies that losses from house property up to Rs. 200,000, capital gains losses, and business losses from a salary source cannot be set off in the described manner. An example is provided to illustrate setting off losses across different heads.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 2

    [Section 71]- Set Off of Loss from one head against income from

    another head (Inter-head adjustment)


    https://incometaxmanagement.com/Direct-Taxes/AY-2021-22/carry-forward-set-off-of-loss/2-set-off-of-loss-under-
    inter-head-adjustment-section-71.html

    Set Off of Loss from one head against income from another head (Inter-head adjustment)
    [Section 71]
    As per section 71(1), where in respect of any assessment year, if after setting off losses against income under the same head, the
    net result of the computation under any head of income, other than "Capital Gains" is a Loss, the assessee shall be entitled to
    have the amount of such a loss set off against his income, if any, assessable for that assessment year under any other head.

    For instance, loss from business can be set off from income under the head house property and loss under the head income from
    other sources may be set off against profits of business. etc.

    Further, as per section 71(2), where in respect of any assessment year, the net result of the computation under any head of
    income, other than "Capital gains", is a loss and the assessee has income assessable under the head "Capital Gains", such loss
    may be set off against his income, if any, assessable for that assessment year under any head of income including the head
    "Capital gains" (whether relating to short-term capital assets or any other capital assets).

    Losses under the head 'House Property', 'Capital gains' and 'Business or Profession' shall be treated as
    under:

    (1) Loss under the head Business or Profession [Section 71(2A)]:

    Where in respect of any assessment year, the net result of the computation under the head "profits and gains of business or
    profession" is a loss and the assessee has income assessable under the head "Salaries", the assessee shall not be entitled to
    have such loss set off against such income. However, it shall be allowed to set off from income under any other head.

    (2) Loss under the head 'Capital Gains' [Section 71(3)]:

    Such capital loss, whether short-term or long-term, shall not be allowed to be set off against income under any other head. It shall
    however be allowed to be carried forward.

    (3) Loss under the head Income from House Property allowed to be set off from any other head upto Rs. 2,00,000
    [Section 71(3A)]:

    Notwithstanding anything contained in section 71(1) or section 71(2), where in respect of any assessment year, the net result of
    the computation under the head "Income from house property" is a loss and the assessee has income assessable under any other
    head of income, the assessee shall be entitled to set off such loss, to the maximum extent of Rs. 2,00,000, against income under
    the other head. The balance loss of income from house property in excess of Rs. 2,00.000 shall be carried forward to be set-off
    only under the head income from house property.

    Example :

    Suppose, in the previous year 2019-20, income from property 'A' is Rs. 1,40,000 and from property 'B' there is a loss of Rs.
    4,80,000. Besides this, there is an income under the head salary amounting to Rs. 6,00,000.

    In this case, loss of 4,80,000 of property B will first be set off from income from property A to the extent of Rs. 1,40,000 as per
    section 70. The net loss of Rs. 3,40,000 under the head income from house property will be allowed to be set off from income
    under the head salary to the extent of Rs. 2,00,000 as per section 71(3A) and the balance of Rs. 1,40,000 shall be carried forward
    to claim it as set off from income under the head house property of the subsequent assessment year.

    As already discussed, in the following cases as intra-head adjustment was not permitted, hence. inter-head adjustment will also be
    not permitted:

    (a) Loss from a speculation business;

    (b) Loss from a specified business referred to in section 35AD;

    (c) Loss from the activity of owning and maintaining race horses;

    (d) Loss of lottery, etc. cannot be set off against winnings from lotteries, crossword puzzles, card games, etc.;

    (e) Loss from a source which is exempt.

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    SET OFF or CARRY FORWARD and SET OFF of LOSSES - Direct Taxes
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