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CA Intermediate · Taxation · Set-Off or Carry Forward and Set-off of Losses

Meera Textiles, a proprietary business run by Meera, has the following results for tax year 2026-27: income from business A (non-speculative) Rs 6,00,000; loss from business B (non-speculative) Rs 2,50,000; income from house property Rs 1,00,000. What is the income under the head 'Profits and gains of business or profession' for the tax year after intra-head set-off?

The business head income is Rs 3,50,000. A non-speculative business loss of Rs 2,50,000 is set off against the Rs 6,00,000 profit of another business under the same head in the same tax year, leaving Rs 3,50,000.

  1. ARs 3,50,000Correct
  2. BRs 6,00,000
  3. CRs 2,50,000
  4. DRs 4,50,000

Explanation

Loss from one non-speculative business can be set off against profit from another business under the same head. Rs 6,00,000 - Rs 2,50,000 = Rs 3,50,000. Rs 4,50,000 wrongly sets off the loss against the house property income too, which is inter-head and does not alter the business head income. Rs 6,00,000 ignores the set-off.

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