Set off of loss from one head against income from another
Section 71 of the Income-tax Act, 1961 deals with set off of loss from one head against income from another. Where in respect of any assessment year the net result of the computation under any head of income, other than "Capital gains", is a loss and the assessee has no income under the head "Capital gains", he shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss se The Act came into force on 01 Apr 1962. Repealed by the Income-tax Act, 2025 with effect from 1 April 2026, but conduct before that date is still charged, tried and appealed under it.
(1) Where in respect of any assessment year the net result of the computation under any head of income, other than "Capital gains", is a loss and the assessee has no income under the head "Capital gains", he shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head.
(2) Where in respect of any assessment year, the net result of the computation under any head of income, other than "Capital gains", is a loss and the assessee has income assessable under the head "Capital gains", such loss may, subject to the provisions of this Chapter, be set off against his income, if any, assessable for that assessment year under any head of income including the head "Capital gains" (whether relating to short-term capital assets or any other capital assets). (2A) Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respect of any assessment year, the net result of the computation under the head "Profits and gains of business or profession" is a loss and the assessee has income assessable under the head "Salaries", the assessee shall not be entitled to have such loss set off against such income.
(3) Where in respect of any assessment year, the net result of the computation under the head "Capital gains" is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to have such loss set off against income under the other head. (3A) Notwithstanding anything contained in sub-section (1) or sub-section (2), where in respect of any assessment year, the net result of the computation under the head "Income from house property" is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to set off such loss, to the extent the amount of the loss exceeds two lakh rupees, against income under the other head.
(4) Where the net result of the computation under the head "Income from house property" is a loss, in respect of the assessment years commencing on the 1st day of April, 1995 and the 1st day of April, 1996, such loss shall be first set off under sub-sections (1) and (2) and thereafter the loss referred to in section 71A shall be set off in the relevant assessment year in accordance with the provisions of that section.
Transitional provisions for set off of loss under the head "Income from house property".
Section 71, The Income-tax Act, 1961 (Act 43 of 1961).
Now in the Income-tax Act
INCOME-TAX-ACT-2025 109 Set off of losses under any other head of income Official correspondence
Measured by comparing the text of the two provisions, not taken from an official correspondence table — there is no machine-readable one. See both texts side by side before relying on it.
Both regimes are live. The repealed enactment still governs what happened while it was in force. We never redirect one to the other.
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 13
- Finance Act s. 5 Substitution of new sections for sections 70 and 71
- Finance Act s. 29 Substitution of new section for section 71
- Finance Act s. 23 Substitution of new-section for section 71
- Finance Act s. 37 Amendment of section 71
- Finance Act s. 38 Insertion of new section 71A
- Finance Act s. 21 Amendment of section 71
- Finance Act s. 14 Amendment of section 71
- Finance Act s. 31 Amendment of section 71
- s. 71B Carry forward and set off of loss from house property
- s. 72 Carry forward and set off of business losses
- s. 75 Losses of firms
- s. 115VL General exclusion of deduction and set off, etc
and 1 more
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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CIT v. Galaxy Surfactants Ltd.
Court's Decision & Legal Precedent
s.10B is a deduction provision (not exemption); absent a s.80-IA(5)-style ring-fence, loss of a 10B EOU (including current depreciation) may be set off under s.70 against profits of other units under the same head. Document header 07.02.2012 matches order index (cited ITAT dates are not the order date). Final Order/Oral Judgment order-1.pdf.
On this section: Teaches the sequential relationship of s.71 inter-head set-off before s.72 carry-forward in the EOU-loss context.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 71
What have the courts held on Section 71 of the Income-tax Act?
CIT v. Galaxy Surfactants Ltd. (07 Feb 2012) is the leading judgment on this section among those set out below: Teaches the sequential relationship of s.71 inter-head set-off before s.72 carry-forward in the EOU-loss context.
How do I find court cases under Section 71 of the Income-tax Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Income Tax Act 71, section 71 Income Tax Act, section 71 of the Income-tax Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 1 reported judgment on this section is set out on this page, beginning with CIT v. Galaxy Surfactants Ltd. (07 Feb 2012).
What should I read with Section 71 of the Income-tax Act, and has it changed?
Its own text turns on section 71A (Transitional provisions for set off of loss under the head "Income from house property"), so none of them can safely be read on its own. 13 other provisions in this corpus refer back to it. For anything done on or after 1 April 2026 the provision to read is Income-tax Act, 2025, section 109 (Set off of losses under other head of income), which replaced it; conduct before that date is still charged, tried and appealed under this section.
When did Section 71 of the Income-tax Act come into force?
Section 71 of the Income-tax Act, cited as Income Tax Act 71, came into force on 01 Apr 1962, having been enacted on 13 Sep 1961. It is no longer in force.
Other sections of this Act
- 10. Incomes not included in total income30885 words
- 2. Definitions11419 words
- 80HHF. Deduction in respect of profits and gains from export or transfer of film software, etc7148 words
- 80-IB. Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings5474 words
- 155. Other amendments5451 words
- 139. Return of income5400 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Recovered from the consolidated text published by the Income Tax Department, as amended by the Finance Act, 2026. India Code holds no record of this Act in any form. This page is not a substitute for legal advice.