SET OFF or CARRY FORWARD and SET OFF of LOSSES- Direct Taxes |
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1-Set Off of Loss from one source against income from another source under the Same Head of Income (Intra-Head Adjustment) [Section 70] |
| 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. This may also be referred to as intra-head adjustment.
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2- 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. |
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3. Carry Forward and Set Off of Business Losses [Section 72] |
| Where the loss under the head 'profits and gains of business or profession' other than loss from speculation business and loss from specified business, could not be set off in the same assessment year because either the assessee had no income under any other head or the income was less than the loss. such loss which could not be set off in the same assessment year, can be carried forward to the following assessment years and it shall be set off against the profit and gains of business or profession subject to the following conditions: |
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