Set Off of Losses

Set off of loss under the same head of income.(section 70) (Intra-head set off) -Income of a person is computed under five heads. ‘Sources’ of income derived by an individual may be many but yet they could be classified under the same head. For instance, an individual may have a dual employment, yet the income would be classified under the head ‘Salaries’. However, given the mechanism of computing taxable salary income, it would be safe to say that an individual .. Full Article

In respect of AY 2003-04, the assessee had an unit in Chennai which was engaged in software development and whose profits were eligible for deduction u/s 10A. The assessee had another unit in Delhi which was engaged in trading and had suffered a loss. The assessee claimed that it was eligible for a deduction u/s 10A on the whole of the profits of the Chennai unit without it being reduced by the losses of the Delhi unit. Full Article

Set-off & Carry Forward of losses [Sections 58 to 60] Income from various sources falling within any head of income shall be set-off. Income / Loss from Capital Gains can be set-off against Loss / Income from any other head of income (from Ordinary Sources), since the differential tax rates in respect of income from [...] Full Article

SUMMARY OF CASE LAW  The provision as stipulated under Explanation to section 73 talk of the income under specified heads; the income under each head has to be computed only after considering the income from various sources under the same head; therefore, the loss from the business has to be set off from the profit [...] Full Article

Income tax is a tax on income earned by a taxpayer in a given year. However, activity of a taxpayer may not always result in income. Certain activities may cause losses too. It would be unfair to tax a person on his income, while ignoring the loss. In recognition of this principle, there are elaborate [...] Full Article

An Indian company engaged in computer software business set up a trading office in Japan. The company's Japan branch suffered loss, which it claimed as deduction from profits earned in India. The assessing officer, however, held that since the profits of the trading office are taxable in Japan only, any loss incurred by the firm in respect of its trading office is not allowable as deduction from the income which is taxable in India. Full Article