No, you cannot just write off and adjust any loss against any gain. The IT Act has clearly prescribed what losses can be written against what gains and soon. On the one hand, capital losses pertain only to capital assets, it would be instructive to look at the entire gamut of losses from the point of view of write-off and set off to get a holistic perspective. Here are some key points to note here…

Loss from a speculation business cannot be set of against profit from any non speculation business. For example, losses on intraday trading are classified as speculative losses as they are not intended for delivery. As a result, intraday losses cannot be set off against short term gains on shares.

Long term capital losses (LTCL) can only be set off against Long term capital gains (LTCG) and cannot be set off against short term capital gains (STCG). However, short term capital losses (STCL) can be written off against short term capital gains (STCG) as well as against long term capital gains (LTCG).

Losses of any head cannot be set-off against casual income i.e. Income from lotteries, crossword puzzles, horse racing, card game, and any other game of any sort or from gambling or betting of any form or nature. Losses from such casual activities can only be set off against income from such casual activities. Also, expenses cannot be claimed against casual income.

Loss from the business of owning and maintaining race horses cannot be set off against any income other than income from the business of owning and maintaining race horses.

Loss from an exempted source cannot be set off against taxable Income. If income from a particular source is exempt from tax, then loss from such source cannot be set off against any other income which is chargeable to tax. For example, till FY 2017-18, the long term capital gains were fully exempt from tax. Hence any long term losses could not be set off or carried forward for these years when the income was exempt.

Loss from business specified under section 35AD cannot be set off against any other income except income from specified business (section 35AD is applicable in respect of certain specified businesses like setting up a cold chain facility, setting up and operating warehousing facility for storage of agricultural produce, developing and building a housing projects, etc).

With effect from the assessment year 2018-19, loss under the head “house property” shall be allowed to be set -off against any other head of income only to the extent of Rs. 2,00,000 for any assessment year. However, unabsorbed loss shall be allowed to be carried forward for set-off in subsequent years as per existing provisions of section 71B.