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CS Executive · Tax Laws and Practice · Clubbing Provisions and Set Off and Carry Forward of Losses

Under the Income-tax Act, 2025, Anil has a speculation loss of Rs 60,000 from last year's carry forward. This year he has profit of Rs 90,000 from speculation business in commodities and Rs 70,000 profit from a non-speculative business. What is the maximum set off of the brought forward loss this year, and against which profit?

The whole Rs 60,000 is set off against the Rs 90,000 speculation profit, leaving Rs 30,000 taxable. Section 113(2) permits a carried forward speculation loss to be set off only against profits of speculation business, not against the non-speculative business profit.

  1. ARs 60,000 against the speculation profitCorrect
  2. BRs 60,000 against the non-speculative profit
  3. CRs 30,000 against each profit
  4. DNil, since carried forward speculation losses cannot be set off

Explanation

Section 113(2) allows a carried forward speculation loss to be set off against profits of any speculation business of the year. The speculation profit of Rs 90,000 exceeds the loss of Rs 60,000, so the whole Rs 60,000 is set off, leaving Rs 30,000 taxable. It cannot be set off against non-speculative profit.

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