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

Meera Textiles (a proprietorship of Meera Nair) has, for tax year 2026-27, a loss of Rs 4,00,000 from its textile business and income of Rs 6,50,000 from a separate consulting profession. She also has Rs 1,20,000 as income from other sources. Under inter-head and intra-head set-off rules, what is her total income, ignoring deductions?

Total income is Rs 3,70,000. The business loss of Rs 4,00,000 is set off against the Rs 6,50,000 profession income within the same head, leaving Rs 2,50,000, and the Rs 1,20,000 income from other sources is then added to it.

  1. ARs 3,70,000Correct
  2. BRs 2,50,000
  3. CRs 7,70,000
  4. DRs 6,50,000

Explanation

Business loss can be set off against profession income, as both fall in the head profits and gains of business or profession. 6,50,000 - 4,00,000 = 2,50,000. Adding other sources of 1,20,000 gives Rs 3,70,000. Rs 2,50,000 wrongly leaves out other-source income.

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