|
|
INTER
SOURCE ADJUSTMENTS
|
|
|
If
an assessee has two or more sources of earning income under the same head then
as per law he is entitled to set off income & losses arising from such
various sources of income to arrive at a final figure of either income or loss
for that particular income head which is called as Inter Head Adjustments.
However this Inter source income adjustment is subject to certain Exceptions
listed below:
|
S
No.
|
Exception
|
Description
|
|
1
|
Loss
in a Speculation business.
|
Loss
in a Speculation business cannot be setoff against any Income other than
a Speculative Income.
|
|
2
|
Long
term Capital loss.
|
Long
term capital loss can be set off against long term capital gains only.
|
|
3
|
Loss
from the activity of owning & maintaining race horses.
|
Loss
incurred from the activity of owning & maintaining race horses can
be set off only against income from such business & not against any
other income.
|
|
4
|
Business
loss.
|
Business
losses cannot be setoff against Salary Income
|
|
5
|
Loss
cannot be set off against winnings from lotteries, crossword puzzles
etc.
|
A
loss under any head of income cannot be set off against winnings from
lotteries, crossword puzzles, races (including horse races), card games
or any other games of any sort or from gambling or betting of any form
or nature.
|
PLEASE
NOTE:
-
Excepting
the above five cases any loss can be set off against any income from that
source. e.g.,
-
Loss
from House Property can be set off against income from any other house
property.
-
Loss
from a Non speculation business can be set off against income from speculation
or non speculation business.
-
Short
tem capital gain can be set off against any capital gains whether long term or
short term.
-
Income
from other sources (except loss from activity of owning & maintaining race
horses can be set off against any income other than winnings from lotteries
etc. stated in exception 5.
-
Losses
cannot be set off against an income specifically exempted from tax u/s 10.
ILLUSTRATIONS..
For Your better understanding
-
Mr A
has the following income from Business & Profession:
-
Profits
from his Professional practice of an Architect Rs. 2,50,000/-
-
Loss
from his proprietary business Rs. 1,75,000/-
-
Net
Income chargeable under Profits & gains from Business & Profession
will be Rs. 75,000/- (2,50,000 -
1,75,000)
-
Mr. X
has incurred a Short term capital loss of Rs. 15,00,000/- and has made a Long
term capital gain of Rs. 32,00,000/- :
-
Net
Income chargeable under Capital gains head is Rs. 17,00,000/- (32,00,000 -
15,00,000
)
|
|