It is allowed in all cases except the following −
(1) Loss from capital gains cannot be adjusted against income from any other head
[Both STCL & LTCL carry forward, no adjustment allowed]
(2) Loss from business can’t be adjusted against income from salaries.
(3) Loss of speculation business
(4) Loss from specified business under section 35AD
(5) Loss from business of owning & maintaining race horses
(6) Loss from lottery / cross word puzzle games etc.
(7) Loss from exempt source
[If income is exempt its loss to be ignored, and can’t be setoff or carry forward]