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CMA Intermediate · Direct and Indirect Taxation · Taxation of Individuals (including AMT) and HUF

Under the Income-tax Act, 2025, a loss computed in respect of a speculation business carried on by an assessee can be set off 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, capital gains or house property income, because section 113(1) restricts the set-off to speculation profits.

  1. AProfits and gains of another speculation businessCorrect
  2. BIncome from any business or profession of the same tax year
  3. CIncome under the head Capital gains
  4. DIncome from house property of the same tax year

Explanation

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

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