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CMA Intermediate · Direct and Indirect Taxation · Set off and Carry Forward of Losses

Under section 113 of the Income-tax Act, 2025, a loss computed in respect of a speculation business of an assessee can be set off in the same tax year only against:

A speculation business loss can be set off only against profits and gains of another speculation business. It cannot be adjusted against non-speculative business income, house property income or capital gains, because section 113(1) restricts the set-off to speculation profits alone.

  1. AProfits and gains of another speculation businessCorrect
  2. BIncome from house property of that year
  3. CProfits and gains of any business or profession, including non-speculative business
  4. DCapital gains of that year

Explanation

Section 113(1) permits a speculation loss to be set off only against profits and gains of another speculation business. Setting it off against non-speculative business profits, house property income or capital gains is not allowed, so those options are wrong.

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