Setoff of losses

Hi friends,

I have a query regarding Setoff under Income Tax Act.

My client is having Salary Income, House property loss and Long Term Capital Gain. Now I have two choices.

Option 1. Setoff Salary income with House Property loss and balance to be taxed at normal rates and entire long term capital gains at 20 %

Option 2. Setoff Loss from House Property with Longterm Capital Gain and Balance amount taxed at 20% and entire Salary Income to be taxed at normal rates.

The more benefecial to the client is Option 2. I need to know whether I can take the choice which is more benefecial to the client or is there any particular rule as to which we should adhere. 

Please help.

Replies (2)

Option2 can be opted for provided the loss from house property is not a carried forward loss

Thank you Ms. Poornima. The House property loss is current year loss only.  

I did the same only while filing return of income, but IT dept rejected my claim and did only the Option 1. 

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