Manner of set off losses

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Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2017 what is manner of set of losses :
first set of losses from inter sources adjustment and next inter head adjustment is it correct. is correct or incorrect please reply in brief.

Tony John

Tony John (Expert)

18 February 2017 I'll give you an example wrt AY 2016-17.
If you have two houses, H1 and H2. H1 has income Rs.150000. H2 shows loss Rs. 60000.
There is normal business loss (ie non speculative and non-specified business loss) Rs. 130000.
Now first you will have to set off loss of H2 with H1. This will result in Income from house property Rs.90,000. (This means inter source adjustment first).
Next you have to adjust normal business loss with Income from house property. Only loss to the extent of Rs. 90000 shall be adjusted due to lack of sufficient profits. Balance Business loss being Rs. 40000 ie Rs. 130000-90000 shall be carried forward if return is filed on time. This loss can be set off with future business income (upto 8 AY)

Tony John

Tony John (Expert)

18 February 2017 It is worthy to note that loss from SPECULATIVE BUSINESS shall be set off only against profit from a speculative business.
Also, loss from any SPECIFIED BUSINESS u/s 35AD shall be set off only against profit from any other SPECIFIED business.

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