Can loss from one transaction be set off against gain from another transaction while calculating TDS?

Yes. As per the Tax laws, setting off of losses against gains is permitted as below:

Set off between short term profits and short-term losses across all transactions and across all scrips within a day
Carry forward of short-term net losses of previous day for set off against short term profits of future days within a month or future months till the end of financial year Please note that set off of losses is permitted only against future profits and not on against earlier profits. The loss can be carried forward for set off either till it is completely set-off against future profits or till the last day of the financial year, whichever is earlier. Thereby, TDS once computed on a net profit (after adjusting carry forward losses, if any) for a day cannot be set off against loss in future.