CA Jasmeet Singh Arora 1

Set-Off & Carry Forward Of Losses

Q.1 Mr. Ram, a resident Individual aged 65 years, submits the following details of his
income for the assessment year 2024-25 :
Particulars Amount Amount

Loss from speculative business 30,000

Income from speculative business 1,50,000

Loss from specified business covered under section 20,000

35AD
Income from Salary (computed) 2,00,000
Loss from let out house property 1,90,000
Loss from cloth business 80,000
Long-term capital gain from sale of urban land 3,00,000
Long-term capital loss on sale of shares (STT not paid) 1,00,000
Long-term capital loss on sale of listed shares in 1,50,000
recognized stock exchange ( STT paid at the time of
acquisition & sale of shares)
Income from betting (Gross) 80,000
Loss from gambling 8,000
Interest on saving bank deposits 12,000
Interest on fixed deposits with banks 40,000
Compute the total income of Mr. Ram and show the items eligible for carry forward,
assuming that he does not opt for the provisions of section 115BAC. (RTP MAY 23 )

Sol. : 1
Computation of Total Income of Ram for the AY 2024-25
Particulars Amount Amount

Salaries
Income from Salary 2,00,000
Less: Loss from house property set-off against 1,90,000
salary
10,000
Profits and gains from business or profession
Income from speculative business B 1,50,000
Less: Loss of ` 30,000 from speculative business A 30,000
Less: Loss from cloth business [Loss from non-
 CA Jasmeet Singh Arora 2

speculative business can be set off against profits

from
speculative business] 80,000
40,000

Capital Gains
Long-term capital gain from sale of urban land 3,00,000
Less: Long-term capital loss on sale of shares (STT 1,00,000
not
paid)
Less: Long-term capital loss on sale of listed shares
in
recognizes stock exchange (STT paid at the time of
acquisition and sale of shares) 1,50,000
50,000
Income from Other Sources
Income from betting 80,000
Interest on savings bank deposits 12,000
Interest on fixed deposits with banks 40,000 1,32,000
Gross Total Income 2,32,000
Less: Deduction under section 80TTB (Maximum 50,000
being
` 50,000, since Mr. Ram is a senior citizen)

Total Income 1,82,000

Notes:
(i) Loss from specified business covered under section 35AD can be set off only
against profits and gains of any other specified business. Therefore, such loss
cannot be set off against any other income. The unabsorbed loss of ` 20,000 has
to be carried forward for set-off against profits and gains of any specified
business in the following year.
(ii) Loss from gambling can neither be set off against any other income, nor can be
carried forward.

Q. 2 Mr. Kabir, a resident individual aged 45 years, furnishes the following particulars of his
income and other details for the previous year 2023-24:
Particulars Amount Amount

Income from tea business 5,00,000

Losses from sugar business 4,00,000
Dividend from Indian company carrying on 1,00,000
agricultural operations (gross)
 CA Jasmeet Singh Arora 3

Agricultural income 55,000

Salary received as a partner from a partnership firm. 4,50,000
The same was allowed to the firm.
Net annual value of house property 4,20,000
Loss from gambling 1,00,000
Short term capital gains on sale of land 75,000
Loss on sale of shares listed in BSE. Shares were 3,00,000
held for 15 months and STT paid on sale and
acquisition
Life insurance premium paid (10% of the capital sum 80,000
assured)
Bank interest on Fixed deposit (gross) 55,000
Interest on saving bank account 13,000
The other details of brought forward losses pertaining to A.Y. 2023-24 are as follow:
Brought forward business loss from sugar business 1,00,000
Brought forward short term capital loss 45,000
Brought forward loss from house property 3,00,000
Brought forward loss from maintenance of race 60,000
horses
Compute the total income of Mr. Kabir for the Assessment Year 2024-25 and the
amount of loss, if any, that can be carried forward, if he does not opt for section
115BAC. (RTP NOV 22)

Sol. : 2
Computation of Total Income of Kabir for the AY 2024-25
Particulars Amount Amount

Income from house property

Net annual value 4,20,000
Less: Deduction under section 24 (30% of ` 4,20,000) 1,26,000
2,94,000
Less: Brought forward loss of ` 3 lakhs from house
property set off to the extent of ` 2,94,000
2,94,000 -
Profit and gains from business or profession
Income from tea business (40% is business income) 2,00,000
Salary received as partner from a partnership firm is
taxable under the head “Profits and gains from
business or profession” 4,50,000
6,50,000
 CA Jasmeet Singh Arora 4

Less: Losses from sugar business 4,00,000

2,50,000
Less: Brought forward business loss from sugar 1,00,000 1,50,000
business
Capital Gains
Short term capital gains on sale of land 75,000
Less: Brought forward short term capital loss 45,000 30,000
Income from Other Sources
Dividend from Indian company 1,00,000
Agricultural income (exempt) -
Bank interest on Fixed deposit 55,000
Interest on saving bank account 13,000 1,68,000
Gross Total Income 3,48,000
Less: Deduction under section 80C (life insurance 80,000
premium paid)
Less: Interest on saving bank account under section
80TTA, to the extent of 10,000 90,000
Total Income 2,58,000

Losses to be carried forward to A.Y. 2025-26

Particulars Amount Amount

Loss from house property of A.Y. 2023-24 6,000

Loss from maintenance of race horses of A.Y. 2023-24 60,000
Long term capital loss on sale of STT paid listed 3,00,000
shares
Notes –
1. 60% of the income from tea business is treated as agricultural income and
therefore, exempt from tax.
2. Agricultural income is exempt under section 10(1).
3. Loss from gambling can neither be set off against any other income, nor can be
carried forward.
4. Long term capital loss on sale of shares on which STT is paid at the time of
acquisition and sale can be set off against long term capital gain only. Since there
is no long term capital gains in A.Y. 2024-25, it has to be carried forward for set-
off against long term capital gains, if any, during A.Y. 2025-26.
5. As per section 74A(3), loss from maintenance of race horses (current year or
brought forward) can be set-off only against income from the activity of owning
and maintaining race horses. Since there is no income from the activity of owning
 CA Jasmeet Singh Arora 5

and maintaining race horses in A.Y. 2024-25, it has to be set off against the income
from the activity of owning and maintaining race horses, if any, in A.Y. 2025-26.

Q. 3 Mr. Rajesh, a resident individual, furnished the following information in respect of

income and loss earned by him for the F.Y. 2023-24

Particulars Amount Amount

Income from Salary 3,40,000

Long term capital loss on sale of shares of Reliance (1,15,000)
Ltd. STT has been paid both at the time of acquisition
and sale
Loss from let out property in Delhi (75,000)
Interest on self-acquired property in Mumbai (50,000)
Winnings from lottery tickets 40,000
Cost of acquisition of lottery tickets 10,000
Profit and gains from manufacturing business (after 96,000
deducting normal depreciation of ` 10,000 and
additional depreciation of ` 4,000)
Long term capital gains on sale of house property 1,40,000

The other details of brought forward losses and unabsorbed depreciation pertaining
to A.Y. 2023-24 are as follow:
Particulars Amount Amount

Brought forward business loss from manufacturing (35,000)

business
Unabsorbed normal depreciation (10,000)
Brought forward loss from the activity of owning and (50,000)
maintaining the race horses
Compute the Gross total income of Mr. Rajesh for the Assessment Year 2024-25 and the
amount of loss, if any, that can be carried forward if he wants to opt for the provisions
of section 115BAC for the first time. (RTP MAY 22)

Sol. : 3
Computation of Total Income of Rajesh for the AY 2024-25
Particulars Amount Amount

Income from Salary 3,40,000

Less: Loss under the head “Income from house
property” [Loss from house property is not allowed to
be set off with any other head of income since Mr. - 3,40,000
 CA Jasmeet Singh Arora 6

Rajesh is opting for section 115BAC]

Income from house property
Self-occupied property [Interest u/s 24(b) is not -
allowed in case of self-occupied property since Mr.
Rajesh is opting for section 115BAC]
Loss from let out property [Carried forward to (75,000) -
A.Y. 2025-26]
Profit and gains from business or profession
Profit and gains from manufacturing business 96,000
Add: Additional depreciation not allowable in case of
section 115BAC 4,000
1,00,000
Less: Brought forward loss from manufacturing 35,000
business
Less: Unabsorbed normal depreciation 10,000 55,000
Capital Gains
Long term capital gains on sale of house property 1,40,000
Less: long term capital loss on sale of shares on which
STT is paid can also be set-off as per section 74(1),
since long-term capital gain arising on sale of such
shares is taxable under section 112A (1,15,000) 25,000
Income from Other Sources

Winnings from lottery tickets 40,000

Gross Total Income 4,60,000

Losses to be carried forward to A.Y. 2025-26

Particulars Amount Amount

Loss from let out property in Delhi 75,000

Loss from the activity of owning and maintaining the 50,000
race horses

Notes -
1. As per section 74A(3), loss from the activity of owning and maintaining the race
horses cannot be set-off against income from any source other than the activity
of owning and maintaining race horse.
2. As per section 58, no expenditure is allowed from the lottery winnings.
 CA Jasmeet Singh Arora 7

Q. 4 Ms. Aarti, a resident individual, provides the following information of her

income/losses for the year ended on 31st March, 2024:
Particulars Amount Amount

Income from salary (Computed) 8,20,000

Income from house property (let out) (Net Annual 1,20,000
Value)
Share of profit from firm in which she is partner 48,000
Loss from specified business covered under section 67,000
35AD
Income from textile business before adjusting the 3,30,000
following items:
(a) Current year depreciation 53,000
(b) Unabsorbed depreciation of earlier year 1,85,000
(c) Brought forward loss of textile business of the 1,90,000
A.Y. 2018-19
Long-term capital gain on sale of debentures 1,50,000
(unlisted)
Long-term capital loss on sale of equity shares (STT 1,50,000
not paid)
Long-term capital gain on sale of equity shares listed 2,50,000
in recognized stock exchange (STT paid at the time
of acquisition and sale)
Dividend from units of UTI 1,15,000
Repayment towards housing loan taken from a 4,85,000
scheduled bank. Out of this ` 3,28,000 was towards
payment of interest and rest towards principal.
Compute the Gross Total Income of Ms. Aarti and ascertain the amount of loss that
can be carried forward. Ms. Aarti has always filed her return within the due date
specified under section 139(1) of the Income-tax Act, 1961. She does not want to opt
for 115BAC.
(RTP NOV 21)

Sol. : 4
Computation of Gross Total Income of Aarti for the AY 2024-25
Particulars Amount Amount

Salary Income (computed) 8,20,000

Less: As per section 71(3A), loss from house 2,00,000 6,20,000

property of
` 2,44,000 can be set-off, to the extent of
 CA Jasmeet Singh Arora 8

Income from House Property

Net Annual Value of House Property 1,20,000

Less: Deduction u/s 24

(a) 30% of NAV 36,000

(b) Interest on housing loan 3,28,000
Loss from house property (2,44,000)
Less: Loss eligible for set-off against salary income
restricted to 2,00,000
Loss to be carried forward to A.Y. 2025-26 for set-
off against income from house property, if any, in (44,000)
that year.
Profits and gains of business or profession
Share of profit from firm [Exempt u/s 10(2A)] -
Loss from specified business u/s 35AD ` 67,000 [can -
be set-off only against income from any specified
business. Hence, it has to be carried forward to
A.Y.2025-26]
Income from textile business 3,30,000
Less: Current year depreciation 53,000
2,77,000
Less: Brought forward loss of textile business 1,90,000
87,000
Less: Set-off of unabsorbed depreciation to the NIL
extent of 87,000
` 87,000 against business income

Capital Gains
Long-term capital gains on sale of listed equity 2,50,000
shares (STT paid)
Less: Balance unabsorbed depreciation of ` 98,000 98,000
set-off
Long-term capital gains on sale of listed equity 1,52,000 1,52,000
shares [No tax is payable u/s 112A, since the
amount does not exceed
` 1,00,000]
Long-term capital gains on sale of debentures 1,50,000
Less: Set-off of Long-term capital loss on sale of 1,50,000 Nil
equity shares (STT not paid) [Since long-term
capital gain on sale of unlisted debentures are
taxable @20% and long-term term capital gain on
 CA Jasmeet Singh Arora 9

sale of listed shares in excess of

`1,00,000 taxable @10%, it is beneficial to set-off
long-term capital loss against LTCG on sale of
debentures]
Income from Other Sources
Dividend from units of UTI [Taxable in the hands of 1,15,000
the unitholders]
Gross Total Income 8,87,000

Losses to be carried forward to A.Y. 2025-26

Particulars Amount Amount

Losses from specified business [can be carried forward 67,000

indefinitely for set-off against income from any
specified business]
Loss from house property [can be carried forward 44,000
upto 8 successive assessment years for set-off against
income from house property]

Q. 5 Mr. Prakash furnishes the following information for the financial year 2023-24.
Particulars Amount Amount

Loss from speculation business-X 85,000

Profit from speculation business-Y 45,000
Interest on borrowings in respect of self-occupied 3,18,000
house property
Income from let out house property 1,20,000
Presumptive Income from trading and 1,00,000
manufacturing business under section 44AD
Salary from XYZ (P) Ltd. 5,25,000
Interest on PPF deposit 65,000
Long term capital gain on sale of Vacant site 1,25,000
Short term capital loss on sale of Jewellery 65,000
Investment in tax saver deposit on 31-03-24 60,000
Brought forward loss of business of assessment year 1,00,000
2018-19
Donation to a charitable trust recognized under 60,000
section 12AA and approved under section 80G
(payment made via credit card)
 CA Jasmeet Singh Arora 10

Compute total income of Mr. Prakash for the assessment year 2024-25 also show the
loss, eligible to be carried forward. Assume that he does not opt for section 115BAC.
(RTP MAY 2021)

Sol. : 5
Computation of Total Income of Prakash for the AY 2024-25
Particulars Amount Amount

Salary from XYZ (P) Ltd. 5,25,000

Less: Standard Deduction u/s 16(ia) 50,000
4,75,000
Less: Loss from house property of ` 20,000 [` 80,000 -
` 60,000, being the loss set-off against long-term
capital gains]

20,000 4,55,000
Income from house property
Income from let out house property 1,20,000
Less: Loss from self-occupied house property to the
extent of `
2 lakhs, allowable as deduction u/s 24(b) in respect of 2,00,000
interest on borrowings
(80,000)
Less: Amount set-off against other heads of income (80,000)
Profits and gains from business or profession
Profit from speculation business Y 45,000
Less: Loss of ` 85,000 from speculation business X set-
off against profit from speculation business Y to the
extent of such profit (45,000)
Nil

Presumptive Income from trading and manufacturing 1,00,000

business
Less: Brought forward business loss of A.Y. 2015-16 set-
off since the period of eight assessment years has not
expired (1,00,000) Nil
Capital Gains
Long term capital gain on sale of vacant site 1,25,000
Less: Short term capital loss on sale of jewellery 65,000
60,000
Less: Loss from house property to be set-off to the
extent of LTCG
 CA Jasmeet Singh Arora 11

(It is more beneficial for Mr. Prakash to first set-off the

loss from house property against the long-term capital
gains, since it is taxable @20%)
60,000 Nil
Income from Other Sources
Interest on PPF deposit 65,000
Less: Exempt 65,000 Nil
Gross Total Income 4,55,000
Less: Deduction under Chapter VI-A
Deduction under section 80C
Investment in tax saver deposit on 31.3.2024 60,000
Deduction under section 80G
Donation to recognized and approved charitable trust
[Donation of ` 60,000 to be first restricted to ` 39,500,
being 10% of adjusted total income of ` 3,95,000 (`
4,55,000 – ` 60,000). Thereafter, deduction would be
computed at 50% of ` 39,500. 19,750
79,750
Total Income 3,75,250
Losses to be carried forward to A.Y. 2025-26
Particulars Amount Amount

Loss from speculation business X (` 85,000 - ` 45,000) 40,000

Loss from speculation business can be set-off only
against profits of any other speculation business. If
loss cannot be so set-off, the same has to be carried
forward to the subsequent year for set off against
income from speculation business, if any, in that year.
Q. 6 Mr. Krishan, residing in Indore, provides the following information for the financial
year 2023-24:
Particulars Amount Amount

Income from textile business 4,60,000

Income from speculation business 25,000
Loss from gambling 12,000
Loss on maintenance of race horse 15,000
Current year depreciation of textile business not 5,000
adjusted in the income given above.
Unabsorbed depreciation of assessment year 2022-23 10,000
Speculation business loss of assessment year 2023-24 30,000
 CA Jasmeet Singh Arora 12

Compute the Gross Total Income of Mr. Krishan for the Assessment year 2024-25 and
also state the losses eligible for carry forward and period upto which such losses can
be carried forward (RTP NOV 2020)

Sol. : 6
Computation of Total Income of Krishan for the AY 2024-25
Particulars Amount Amount

Profits and gains of business or profession

Income from Textile business 4,60,000
Less: Current year depreciation allowable under
section 32(1) 5,000
4,55,000
Less: Unabsorbed depreciation brought forward from
A.Y.2018-19 as per section 32(2) 10,000
4,45,000
Income from speculation business
Current year income from speculation business 25,000
Less: Speculation business loss for A.Y. 2019-20 set-off
as per the provisions of section 73(2) 30,000
Speculation business loss to be carried forward (5,000)
Nil
Gross Total Income 4,45,000

Losses to be carried forward to A.Y. 2025-26

Particulars Amount Amount

Loss from speculation business to be carried forward 5,000

as per section 73
Loss from speculation business can be set off only
against income from another speculation business.
The remaining loss from speculation business can be
carried forward for a maximum of four assessment
years immediately succeeding the assessment year
for which the loss was first computed. Thus, such loss
can be carried forward upto AY 2027-28

Loss on maintenance of race horses to be carried 15,000

forward as per section 74A(3)
Loss on maintenance of race horses can be set-off
only against income from the activity of owning and
maintaining race horses. Such loss can be carried
 CA Jasmeet Singh Arora 13

forward for a maximum of four assessment years

immediately succeeding the assessment year for
which the loss was first computed. Thus, such loss
can be carried forward upto A.Y.2028-29

Loss from gambling can neither be set-off nor be

carried forward.

Q. 7 Compute total income of Mr. Mathur for the assessment year 2024-25 from the
following information furnished by him for the financial year 2023-24. (RTP MAY 2020)
Particulars Amount Amount

Salary income (computed) 4,70,000

Loss from self-occupied house property 2,00,000
Loss from let out house property 60,000
Loss from speculation business-X 80,000
Profit from speculation business-Y 40,000
Income from trading and manufacturing business @ 3,50,000
8%
Interest on PPF deposit 95,000
Long term capital gain on sale of Vacant site 2,10,000
(Computed)
Short term capital loss on sale of Jewellery 1,50,000
Investment in tax saver deposit on 31-03-2024 60,000
Brought forward loss of business of assessment year 5,50,000
2018-19
Donation to a charitable trust recognized under 1,10,000
section 12AA and approved under section 80G paid by
cheque
Enhanced compensation received from government 3,00,000
for compulsory acquisition of land (held for a period
of 5 years) in the year 2010

Sol. : 7
Computation of Total Income of Mr . Mathur for the AY 2024-25

Particulars Amount Amount

Salaries 4,70,000
Profits and gains from business or profession
 CA Jasmeet Singh Arora 14

Profit from speculation business Y 40,000

Less: Loss of ` 80,000 from speculation business X set-
off against profit from speculation business Y to the
extent of such profit (40,000)
Loss of ` 40,000 from speculation business X to be
carried forward to A.Y. 2025-26 for set-off against
profits from speculation business.
Income from trading and manufacturing business @8% 3,50,000
Less: Brought forward business loss of A.Y. 2018-19 set-
off since a period of eight assessment years has not NIL
expired. (3,50,000)
Balance loss of ` 2,00,000 to be carried forward to A.Y.
2025-26
Capital Gains
Enhanced compensation received from government 3,00,000
for compulsory acquisition [Taxable in P.Y. 2023-24
since enhanced compensation is taxable on receipt
basis]
Long term capital gain on sale of vacant site 2,10,000
Less: Short term capital loss on sale of jewellery (1,50,000)
3,60,000
Less: Loss from house property can be set-off to the (2,00,000) 1,60,000
extent of ` 2,00,000 as per section 71(3A) [since long-
term capital gains would be chargeable to tax @20%, it
would be beneficial to set-off the loss from house
property against LTCG]. Balance loss of ` 60,000 to be
carried forward to AY 2025-26

Income from Other Sources

Interest on PPF deposit 95,000
Less: Exempt under section 10(11) (95,000) Nil
Gross Total Income 6,30,000

Less: Deduction under Chapter VI-A

80,500
Deduction under section 80C

Investment in tax saver deposit on 31.3.2024 60,000

 CA Jasmeet Singh Arora 15

Deduction under section 80G

Donation to recognized and approved charitable trust

[Donation of ` 1,10,000 to be first restricted to ` 41,000,
being 10% of adjusted total income of ` 4,10,000 i.e., [`
6,30,000 – ` 1,60,000 – ` 60,000]. Thereafter, deduction
would be computed at 50% of ` 41,000. 20,500
Total Income 5,49,500

Q. 8 Compute the gross total income of Mr. Avinash from the following information
furnished by him for the year ended 31-03-2024 :
Particulars Amount Amount

Loss from speculative business MNO 12,000

Income from speculative business BPO 25,000
Loss from specified business covered under section 45,000
35AD
Income from salary (computed) 4,18,000
Loss from house property 2,20,000
Income from trading business 2,80,000
Income from owning and maintaining race horses 8,000
Long-term capital gain from sale of urban land 2,05,000
Long-term capital loss on sale of equity shares (STT 85,000
not paid)
Long-term capital loss on sale of listed equity shares 1,10,000
in recognized stock exchange (STT paid at the time of
acquisition and sale of shares)
(1) Losses from owning and maintaining of race horses pertaining to A.Y. 2022- 2023
Rs 12,000.
(2) Brought forward loss from speculative business MNO 18,000 relating to A.Y. 2021-
22.
(3) Brought forward loss from trading business of ` 12,000 relating to A.Y. 2020-21.
Assume Mr. Avinash has furnished his return of income on or before the due date
specified under section 139(1) in all the above previous years.( RTP MAY 2019 )
 CA Jasmeet Singh Arora 16

Sol. : 8
Computation of Gross Total Income of Mr. Avinash for the AY 2024-25
Particulars Amount Amount

Salaries
Income from Salary 4,18,000
Less: Loss from house property set-off against salary (1,90,000) 2,28,000
[As per section 71(3A), loss from house property to
the extent of ` 2,00,000 can be set-off against any
other head of income. In case of Mr. Avinash, it is
more beneficial to set-off the loss from house
property against long-term capital gains, since LTCG
would be taxable @ 20%. Accordingly, loss to the
extent of ` 10,000 is set-off against LTCG (shown
below) and ` 1,90,000 s et-off against income under
the head “Salaries”]
Profits and gains of business or profession
Income from trading business 2,80,000
Less: Brought forward loss from trading business of 2,68,000
A.Y. 2020-21 can be set off against current year
income from trading business as per section 72(1),
since the eight-year time limit as specified under (12,000)
section 72(3), within which set- off is permitted, has
not expired.
Income from speculative business BPO 25,000
Less: Loss from speculative business MNO set-off as (12,000)
per section 73(1)
Loss from speculative business MNO brought NIL
forward from (13,000)
A.Y. 2021-22 as per section 73(2), can be set off to the
extent of
Capital Gains
Long term capital gain on sale of urban land 2,05,000
Less: Long term capital loss on sale of shares (STT
not paid) set-off as per section 74(1) (85,000)
Less: Long-term capital loss on sale of listed equity
shares on which STT is paid can also be set-off as per
section 74(1), since long-term capital arising on sale
of such shares is taxable under section 112A (1,10,000)
Less: Loss from house property (10,000) NIL
Income from owning and maintaining race horses 8,000
Less: Set-off of brought forward losses from owning NIL
 CA Jasmeet Singh Arora 17

and maintaining race horses as per section 74A(3)

(8,000)
Gross Total Income 4,96,000

Q. 9 The following are the details relating to Mr. Praveen, a resident Indian, relating to
the year ended 31.3.2024:
Particulars Amount Amount

Income from salaries 2,20,000

Loss from House Property 2,50,000
Loss from toy business 1,30,000
Income from speculation business 40,000
Loss from specified business covered by section 35AD 20,000
Long-term capital gains from sale of urban land 2,50,000
Long Term Capital Loss from sale of Listed shares in 1,10,000
RSE (STT paid at the time of acquisition & sale of
shares
Loss from card games 32,000
Income from betting (Gross) 45,000
Life Insurance Premium paid (10% of the capital sum 50,000
assured )
( RTP MAY 2018)
Sol. : 9
Computation of Total Income of Mr Praveen for AY 2024-25
Particulars Amount Amount

Salaries
Income from salaries 2,20,000
Less: Loss from house property set off against 2,00,000 20,000
salary as per Sec 71(1)& 71( 3A )
Profits and gains of business or profession
Income from speculation business 40,000
Less: Loss from toy business 40,000 Nil
Capital gains
Long-term capital gains from sale of urban land 2,50,000
Less : Long-term capital loss on sale of listed shares 1,10,000
on which STT is paid can be set off as per sec 74(1),
since long term capital gain arising on sale of such
shares is taxable u/s 112 A
 CA Jasmeet Singh Arora 18

1,40,000
Less : Loss from toy business Set off 50,000
90,000
Income from other sources

Income from betting 45,000

Gross Total Income 1,15,000

Less: Deduction under section 80C (life insurance 20,000

premium paid) ]
Total income 95,000

Losses to be carried forward:

Loss from house property (` 2,50,000 - ` 2,00,000) 50,000
Loss from toy business (` 1,30,000 - ` 40,000 - ` Nil
90,000)
Loss from specified business covered by section 20,000
35AD

Q. 10 Mr. Rakesh Gupta has derived the following income/loss, as computed below, for the
previous year 2023-24:
Particulars Amount Amount
Loss from let out house property 2,50,000
Loss from non-speculation business 3,20,000
Income from speculation business 12,45,000
Loss from specified business covered u/s 35AD 4,10,000
Winnings from lotteries (Gross) 1,50,000
Winnings from bettings (Gross) 90,000
Loss from card games 3,40,000
You are required to compute the total income of the assessee for the assessment year
2024-25, showing clearly the manner of set-off and the items eligible for carry forward.
The return of income has been filed on 30-7-2024 (PYP NOV 2018)

Sol. : 10
Computation of total income of Mr. Rakesh Gupta for the A.Y.2024-25
Particulars Amount Amount

Profits and gains of business or profession

Income from speculation business 12,45,000

Less: Set-off of loss from non-speculation business 3,20,000
9,25,000
 CA Jasmeet Singh Arora 19

Less: Set-off of loss from house property, 2,00,000 7,25,000

restricted to
Income from other sources
Winnings from lotteries 1,50,000
Winnings from bettings [See Note below] 90,000 2,40,000
Gross Total Income 9,65,000

Less: Deduction under Chapter VI-A Nil

Total income 9,65,000

Losses to be carried forward to A.Y.2025-26:

Loss from house property (` 2,50,000 - ` 2,00,000) 50,000
As per section 71(3A), loss from house property can
be set-off against any other head of income to the
extent of ` 2,00,000 only. As per section 71(3A),
balance loss not set-off can be carried forward to
the next year for set-off against income from house
property of that year
Loss from specified business covered by section 4,10,000
35AD
Loss from specified business under section 35AD
can be set-off only against profits of any other
specified business. As per section 73A(2), if loss
cannot be so set-off, the same has to be carried
forward to the subsequent year for set off against
income from specified business, if any, in that year.
Since the return has been filed before the due date,

Loss from card games

Loss from card games can neither be set off against
any other income, nor can it be carried forward.

Q. 11 Mr. X a resident individual submits the following information, relevant to the previous
year ending March 31, 2024 :
Particulars Amount Amount

Income from Salary (Computed) 2,22,000

Income from House Property
- House in Delhi 22,000
- House in Chennai (-) 2,60,000
- House in Mumbai (self-occupied) (-) 20,000
 CA Jasmeet Singh Arora 20

Profit and gains from business or profession

- Textile business 18,000
- Cosmetics business (-) 22,000
- Speculative business- 1 (-) 74,000
- Speculative business-2 46,000
Capital gains
Short term capital loss from sale of (-) 16,000
property Long term capital gains from 15,400
sale of property
Income from other sources (Computed)
- Income from betting 34,000
- Income from card games 46,000
- Loss on maintenance of race horses (-)14,600
Determine the gross total income of Mr. X for the assessment year 2024-25 and the
losses to be carried forward assuming that he does not opt to be taxed under section
115BAC. (PYP JULY 21)

Sol. : 11
Computation of Gross Total Income of Mr. X for A.Y. 2024-25
Particulars Amount Amount

Income from Salary (Computed) 2,22,000

- Less: Set-off of loss from house property of ` 2,00,000 22,000
2,58,000 to the extent of ` 2 lakhs by virtue of
section 71(3A)
Income from house property

- House in Delhi 22,000

- House in Chennai (2,60,000)
- House in Mumbai (self-occupied) (20,000)
(2,58,000)
Loss upto ` 2 lakhs can be set off against income from
salary.
Balance loss of ` 58,000 from house property has to
be carried forward to A.Y.2025-26.
Profits and gains from business or profession
Profits from Speculative business – 2 46,000
Less: Loss of ` 74,000 from speculation business - 1 set (46,000)
off to the extent of profits of ` 46,000 as per section
 CA Jasmeet Singh Arora 21

73(1) from another speculation business. Loss from

speculation business cannot be set-off against any
income other than profit and gains of another
speculation business.
Hence, the balance loss of ` 28,000 from speculative
business has to be carried forward to A.Y.2025-26.
Profits from textile business 18,000
Less: Loss from cosmetic business of ` 22,000 set off
against profits from textile business to the extent of
` 18,000 as per section 70(1). (18,000)
Balance loss of ` 4,000 from cosmetic business has to
be carried forward to A.Y.2025-26, since the same
cannot be set-off against salary income.
Capital Gains
Long term capital gain from sale of property 15,400
Less: Short-term capital loss can be set-off against
both short-term capital gains and long-term capital
gains. Short term capital loss of ` 16,000 set off
against long- term capital gains to the extent of ` (15,400)
15,400 as per section 74(1).
Balance short term capital loss of ` 600 has to be carry
forward to A.Y.2025-26
Income from Other Sources
Income from betting [No loss is allowed to be set off 34,000
against such income]
Income from card games [No loss is allowed to be set 46,000
off against such income]
Loss on activity of owning and maintenance of race Nil
horses [Loss incurred on activity of owning and
maintenance of race horses cannot be set-off against
income from any source other than the activity of
owning and maintaining race horses. Hence, such loss
of 80,000
` 14,600 has to be carried forward to A.Y.2025-26] 1,02000

Gross Total Income

Q. 12 Ms. Pooja a resident individual provides the following information of her

income/losses for the year ended on 31st March, 2024:
Particulars Amount Amount
 CA Jasmeet Singh Arora 22

Income from salary (Computed) 2,20,000

Income from House Property (let out) (Net Annual 1,50,000
Value)
Share of loss from firm in which she is partner 10,000
Loss from specified business covered under section 20,000
35AD
Income from textile business before adjusting the 3,00,000
following items:
(a) Current year depreciation 60,000
(b) Unabsorbed depreciation of earlier year 2,25,000
(c) Brought forward loss of textile business of the 90,000
A.Y. 2018-19
Long-term capital gain on sale of debentures 75,000
Long-term capital loss on sale of equity shares (STT 1,00,000
not paid)
Long-term capital gain on sale of equity shares listed 1,50,000
in recognized stock exchange (STT paid at the time
of acquisition and sale)
Dividend from units of UTI 5,000
During the previous year 2023-24, Ms. Pooja has repaid ` 5,25,000 towards housing loan
from a scheduled bank. Out of this ` 3,16,000 was towards payment of interest and rest
towards principal.
Compute the gross total income of Ms. Pooja and ascertain the amount of loss that can
be carried forward. Ms. Pooja has always filed her return within the due date specified
under section 139(1) of the Income-tax Act, 1961.(PYP NOV 2020)

Sol. : 12
Computation of Gross Total Income of Pooja for A.Y. 2024-25
Particulars Amount Amount

Salary Income (computed) 2,20,000

Less: As per section 71(3A), loss from house
property of 2,00,000 20,000
Rs 2,11,000 can be set-off, to the extent of
Income from House Property
Net Annual Value of House Property 1,50,000
Less: Deduction u/s 24
(a) 30% of NAV
45,000
 CA Jasmeet Singh Arora 23

(b) Interest on housing loan

3,16,000
Loss from house property (2,11,000)
Less: Loss eligible for set-off against salary income
restricted to 2,00,000
Loss to be carried forward to A.Y. 2025-26 for set-off
against income from house property, if any, in that (11,000)
year.
Profits and gains of business or profession
Share of loss from firm [loss from exempt source
cannot be set-off against profit from taxable source.
Hence such loss can neither be set-off nor be carried
forward]
Loss from specified business u/s 35AD ` 20,000 [Can
be set-off only against income from any specified
business. Hence, it has to be carried forward to
A.Y.2025-26]
Income from textile business 3,00,000
Less: Current year depreciation 60,000
2,40,000
Less: Brought forward loss of textile business 90,000
1,50,000
Less: Unabsorbed depreciation (` 2,25,000) set-off to
the extent of
NIL
1,50,000
Capital Gains
Long-term capital gains on sale of debentures 75,000
Less: Set-off of Long-term capital loss on sale of
equity shares (STT not paid) 75,000
Nil
Long-term capital gains on sale of listed equity 1,50,000
shares (STT paid)
Less: Set-off of balance long-term capital loss on
sale of equity shares (STT not paid) [` 1,00,000 – ` 25,000
75,000]
1,25,000
 CA Jasmeet Singh Arora 24

Less: Set-off of balance unabsorbed

75,000
depreciation [` 2,25,000 – ` 1,50,000 s/o against
business income]

Long-term capital gains on sale of listed equity 50,000

shares
Income from Other Sources

Dividend from units of UTI - Taxable 5,000

Gross Total Income 75,000

Losses to be carried forward to A.Y.2025-26

Losses from specified business [can be carried 20,000

forward indefinitely for set-off against income from
any specified business]
Loss from house property [can be carried forward 11,000
upto 8 successive assessment years for set-off
against income from house property]

Q. 13 Following are the details of incomes/losses of Mr. Rishi for the F.Y. 2023-24
Particulars Amount Amount

(Figures in brackets represents losses) `

Taxable salary income (computed) 3,60,000
Taxable income from house property (computed)
- from rented house property X 1,20,000
- from rented house property Y (3,40,000)
Taxable profit from business (computed)
- business P 2,30,000
- business Q (12,000)
- business R (speculative business) 15,000
- business T (speculative business) (25,000)
Taxable Income from other sources :
- from card games 16,000
- from owning & maintenance of race horses (7,000)
- interest on securities 5,000
You are required to determine the Gross total income of Mr. Rishi for Assessment Year
2024-25. (PYP NOV 2019)
 CA Jasmeet Singh Arora 25

Sol. : 13
Computation of Gross Total Income of Rishi for A.Y. 2024-25
Particulars Amount Amount

Salary Income (computed) 3,60,000

Less: Set-off of loss from house property ` 2,20,000, 2,00,000
restricted to
1,60,000
Income from House Property
Income from Property X 1,20,000
Less: Loss from Property Y [inter-source set-off is
permitted under section 70(1)] 3,40,000
Loss from house property 2,20,000
Less: Loss eligible for set-off against salary income
as per section 71(3A), restricted to 2,00,000
Loss to be carried forward to A.Y. 2025-26 as per
section 71B, for set-off against income from house
property, if any, in that year. (20,000)
Profits and gains of business or profession
Income from business P 2,30,000
Less: Loss from business Q (inter-source set-off is 12,000
permitted) 2,18,000

Income from speculation business R 15,000

Less: Loss from speculation business T [can be set-
off only against income from speculation business 25,000
as per section 73(1)]
Loss to be carried forward to A.Y. 2025-26 for set-off (10,000)
against speculative business income of that year by
virtue of section 73(2).
Income from Other Sources

Income from card games 16,000

Interest on securities 5,000 21,000

Loss from owning & maintaining race horses (7,000)

[Not allowed to be set-off against any other income
under this head or under any other head. Thus, such
loss has to be carried forward to A.Y. 2025-26 for set-
off against income, if any, from owning and
maintaining race horses in that year by virtue of
 CA Jasmeet Singh Arora 26

section 74A(3)]
Gross Total Income 3,99,000

Q. 14 Mr. Harsh furnishes the following details for the year ended on 31-03-2024
Particulars Amount Amount

Salary received from partnership firm (the same 8,50,000

was allowed to the firm)
Loss on sale of shares listed in stock exchange held 6,00,000
for 18 months and the STT paid on the sale and
acquisition
Long term capital gain on sale of land 5,00,000
Brought forward business loss of assessment year 6,00,000
2014-15
Loss of the specified business covered in Section 3,50,000
35AD
Loss from house property 2,50,000
Income from betting (gross) 50,000
Loss from card games 35,000
Compute the total income and show the item eligible for carry forward of Mr. Harsh
for the assessment year 2024-25 (PYP MAY 2022)

Sol. : 14
Computation of Gross Total Income of Harsh for A.Y. 2024-25
Particulars Amount Amount

Profits and gains from business and profession

Salary received from partnership firm (would be 8,50,000

fully taxable
in the hands of Mr. Harsh as business income, since
the same was allowed to the firm as deduction)
Less: Loss from house property ` 2,50,000 (can be 2,00,000
set-off against income from any other head only to
the extent of
` 2 lakh)
6,50,000
Less: Set-off of brought forward business loss of 6,00,000
A.Y. 2016-17 (since the eight year time period for set-
off has not expired)
 CA Jasmeet Singh Arora 27

50,000
Capital Gains
Long-term capital gain on sale of land 5,00,000
Less: Set-off of long-term capital losses (since held
for 18 months i.e., more than 12 months) on sale of
STT paid listed shares [Such set-off is permissible
since it is a loss from a source of income taxable u/s 5,00,000
112A]
Income from Other Sources
Income from betting (gross) 50,000
[No Loss can be set off against income from
betting]
Loss of ` 35,000 from card games can neither be
set-off nor be carried forward
Total Income 1,00,000
Losses to be carried forward to A.Y. 2025-26 Amount
Loss from house property (` 2,50,000 – ` 2,00,000) 50,000
Loss from specified business covered u/s 35AD 3,50,000
[Entire loss is to be carried forward, since there is
no income from any specified business for A.Y.2022-
23. Such loss has to be carried forward for set-off
against income from any specified business in
A.Y.2025-26
Long-term capital loss on sale of listed shares (STT 1,00,000
paid) [` 6,00,000 – ` 5,00,000]

Q. 15 Compute the gross total income of Mr. Prakhar for A.Y. 2024-25 and the losses to be
carried forward, from the information given below:
Particulars Amount Amount

Income from House Property (computed) 3,60,000

` (-) 70,00

Short term capital loss on shares of a company (-) 18,700

Long term capital gain on sale of agricultural land 6,000
Income from rubber business (plants grown by Mr. 80,000
Prakhar)
Loss from garment business b/f discontinued in F.Y. -) 70,000
2019-20
Loss from betting (-) 5,500
 CA Jasmeet Singh Arora 28

Income from Lotteries ( Net ) 5,460

(PYP NOV 2022)
Sol. : 15
Computation of Gross Total Income of Prakhar for A.Y. 2024-25
Particulars Amount Amount

Income from house property (computed) 3,60,000

Profits and gains from business and profession

Income from rubber business [35% of income from
28,000
manufacture of rubber is business income [80,000 x
35%] and the balance 65% would be agricultural
income

Less: Brought forward loss of ` 70,000 from garment 28,000

business set-off to the extent of ` 28,000, set-off is
permissible even if the business is discontinued

Capital Gains NIL

Long-term capital gain on sale of agricultural land

(Exempt, assuming that the same is rural
agricultural land)

Income from Other Sources

Income from lotteries (` 5,460 x 100/70) 7,800

[Note – Tax @30% has to be deducted on winnings
from lotteries u/s 194B only if the amount of
payment exceeds 10,000. However, in the question,
winnings from lotteries is only ` 5,460 and the word
“net” is given in the bracket. Since, the word “net”
is written in the bracket in question, main solution is
given based on the view that tax has been deducted
on income from lotteries @30% and accordingly, the
lottery income is grossed up. However, since no tax
is deductible u/s 194B where lottery income does
not exceed 10,000, the question can be answered
without grossing up the lottery income of ` 5,460. In
such a case, gross total income would be ` 3,65,460]
Gross Total Income 3,67,800

Losses to be carried forward to A.Y.2025-26 `

 CA Jasmeet Singh Arora 29

Loss from garment business pertaining to P.Y. 42,000

2019-20 (` 70,000 – ` 28,000)
Short term capital loss on shares of a company of 18,700
A.Y. 2024-25
Loss of ` 5,500 from betting can neither be set-off -
nor be
carried forward.