Aggregation of Income, Set-off

and Carry Forward of Losses

 Submission of Return of Losses [Section 80]

As per section 80, the assessee must have filed a return of loss
under section 139(3) in order to carry forward and set-off:
• business loss to be carried forward under section 72(1)
• speculation business loss to be carried forward under section
73(2)
• loss from specified business to be carried forward under
section 73A(2)
• loss under the head “Capital Gains” to be carried forward
under section 74(1), and
• Loss incurred in the activity of owning and maintaining race
horses to be carried forward under section 74(3)
In other words, the non-filing of a return of loss disentitles the
assessee from carrying forward the above specified losses
sustained by him. Such a return should be filed within the time
allowed under section 139(1).

However, this condition does not apply to a loss from a house

property to be carried forward under section 71B and
unabsorbed depreciation can be carried forward under section
32(2) even if return of loss has not been filed as required under
section 139(3).
 Table showing set-off and carry forward of losses:
Head of Whether losses can be set off Whether losses can be carry Time limit for carry forward
income within the same year forward and set off in and set off of losses
under subsequent years
which loss
is incurred
Under the Under any Under the Under any
same head other head same head other head
1) Income
from
NA NA NA NA NA
Salaries
2) Income
from House
Yes Yes Yes No 8 years
Property
3) PGPB:

(a) Non
speculation
Yes Yes Yes No 8 years
business
(b)
Speculation
Yes No Yes No 4 years
business
(c) Unabsorbed
depreciation
Yes Yes Yes No NA

(d) Unabsorbed
investment
Yes Yes Yes Yes 8 years

4) Capital Gains:
(a) LTCG Yes No Yes No 8 years
(B) STCG Yes No Yes No 8 years
6) Income from other
sources:
(a) Lotteries, crosswords
puzzle, card games,
No No No No NIL
gambling
(b) Loss from activities of
owning and maintaining
Yes No Yes No 4 years
horse race
(c) Other income Yes Yes No No NIL
 Conclusion

The concept of set-off and carry forward helps to understand

that the tax system in India is flexible. The losses can be settled
against profits from the same assessment year and the
subsequent years. Losses from one head can also be resolved
from other heads of income.

The set-off is of two types: The intra-head set-off and the inter
head set-off. The profits from activities like gambling, card
games, horse race and lotteries are not considered during set off.