Setting off of losses

Hi all,

Plz ans wit specific case laws if ur aware and dont be general wit the ans.

Assuming case of an Individual (Basic exemption limit = 1,60,000)

# Brought forward business loss = Rs 2,50,000

Unabsorbed Depn = Rs 1,00,000

Gross Total Income = Rs 2,00,000

In the above case can the B/F loss can be set off only to the extent of Rs 40,000, so as to take the benefit of basic exemption limit - is it permissible ???