Yes, expenses can be adjusted against income of a similar nature under certain conditions, but this depends on accounting standards, tax laws, and specific business circumstances. Let’s analyze this from an accounting and Ind AS/AS perspective.

1. Accounting Treatment as per Ind AS & AS

(A) Ind AS Perspective

📌 Ind AS 1 (Presentation of Financial Statements):

• It generally requires income and expenses to be shown separately in the financial statements.
• Offsetting is allowed only when:
  • Required or permitted by another Ind AS
  • It reflects the substance of the transaction

📌 Ind AS 18 (Revenue Recognition) & Ind AS 115 (Revenue from Contracts with Customers):

• Expenses that are directly linked to revenue (such as cost of sales in case of trading income) can be adjusted against income.

📌 Ind AS 37 (Provisions, Contingent Liabilities, and Contingent Assets):

• If an entity incurs an expense that leads to a compensating claim (e.g., insurance claims, government subsidies), it can be recognized net of the claim if realization is virtually certain.

(B) AS Perspective (Indian GAAP – Accounting Standards)

📌 AS 9 (Revenue Recognition):

• It does not permit netting off expenses against revenue unless they are directly related (e.g., trade discounts, returns).

📌 AS 5 (Net Profit or Loss for the Period, Prior Period Items, and Changes in Accounting Policies):

• Extraordinary income and expenses should not be offset against each other but separately disclosed.

2. When is Offsetting Allowed?

✅ Examples Where Adjustment is Allowed:

• Commission Income vs. Commission Paid: If a company earns commission and pays a commission for the same transaction, they may be netted off.
• Trading Businesses: Cost of goods sold (COGS) is deducted from sales revenue.
• Banking Transactions: Interest income and interest expense of the same nature can be reported net if permitted by the standard.

❌ Examples Where Adjustment is NOT Allowed:

• Different sources of income (e.g., rental income vs. business expenses).
• Operating expenses against unrelated income (e.g., office rent cannot be adjusted against interest income).

3. Taxation Perspective

📌 Under Income Tax Act, 1961, netting off is not generally allowed except:

• Section 70 & 71: Business losses can be set off against business income but not against salary or capital gains.
• Depreciation as per Section 32: Can be adjusted against business profits.
• Capital gains adjustments (short-term vs. long-term).

Final Answer:

• Ind AS & AS generally prohibit offsetting unless specifically permitted.
• Business-related expenses can only be adjusted against income of a similar nature (e.g., direct expenses against trading income).
• Tax laws have specific rules for set-offs, so compliance with Income Tax Act, 1961 is necessary.