Set off of losses allows taxpayers to offset a loss from one source against other incomes under the same head in the year.

Section 108 provides that, subject to other provisions of the Act, a loss arising from computation of income from any source under a head (other than Capital gains) may be set off against income from any other source under the same head in the same tax year. For capital assets, losses from short-term capital assets are set off against income from other capital assets for that year, and losses from long-term capital assets are set off against income from other long-term capital assets for that year.

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