Income-tax Act,1961
Act No : 43
Section :
Losses under the head "Capital gains"
4[74. Losses under the head "Capital gains" (1) Where in respect of any assessment year, the net result of the ---------------------------------------------------------------------- 1 Inserted by the Taxation Laws (Amendment) Act, 1975, w.e.f. 1-4- 1977. 2 Substituted for "other than an investment company, as defined in clause (ii) of section 109' by the Finance Act, 1987, w.e.f. 1-4-1988. 3 Since omitted as a separate head of income. 4 Substituted by the Finance Act, 1987, w.e.f. 1-4-1988. Prior to the substitution, section 74, as substituted by the Finance (No. 2) Act, 1962, 1-4-1962 and amended by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968 and the Finance Act, 1986, w.e.f. 1-4-1987, read as under: "74. Losses under the head "Capital gains".-(1)(a) Where in respect of any assessment year, the net result of the computation under the head ": Capital gains" is a loss, such loss shall, subject to the other provisions of this Chapter, be dealt with as follows:- (i) such portion of the net loss relating to short-term capital assets as ---------------------------------------------------------------------- 1.332 computation under the head "Capital gains" is a loss to the assessee 1[* * *], the whole loss shall, subject to the other provisions of this chapter, be carried forward to the following assessment year, and- (a) it shall be set off against income, if any, under the head "Capital gains" assessable for that assessment year; and (b) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year, and so on. (2) No loss shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed. (3) Any loss computed under the head "Capital gains" in respect of the assessment year commencing on the 1st day of April, 1987, or any earlier ---------------------------------------------------------------------- -> -> cannot be or is not wholly set off against income under any head in accordance with the provisions of section 71 shall be carried forward to the following assessment year and set off against the capital gains, if any, relating to short-term capital assets assessable for that assessment year and, if it cannot be so set off, the amount thereof not so set off shall be carried forward to the following assessment year and so on; (ii)such portion of the net loss as relates to capital assets other than short-term capital assets shall be carried forward to the following assessment year and set off against the capital gains, if any, relating to capital assets other than short-term capital assets assessable for that assessment year and, if it cannot be so set off, the amount thereof not so set off shall be carried forward to the following assessment year and so on: Provided that where, in the case of any assessee not being a company, the net loss computed in respect of such capital assets for any assessment year does not exceed ten thousand rupees, it shall not be carried forward under this section. (b)Notwithstanding anything contained in the Indian Income-tax Act, 1922 (11 of 1922), any loss computed under the head "Capital gains' in respect of the assessment year commencing on the 1st day of April, 1961, or any earlier assessment year which is carried forward in accordance with the provisions of sub-section (2B) of section 24 of that Act, shall be dealt with in the assessment year commencing on the 1st day of April, 1962, or any subsequent assessment year as follows:- (i)in so far as it relates to short-term capital assets, it shall be carried forward and set off in accordance with the provisions of sub-clause (i) of clause (a) and sub- section (2); and (ii)in so far as it relates to capital assets other than short-term capital assets, it shall be carried forward and set off in accordance with the provisions of subclause (ii) of clause (a) and sub-section (2). (2)(a) No loss referred to in sub-clause (i) of clause (a) of sub-section (1) or subclause (i) or sub-clause (ii) of clause (b) of that sub-section shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed under this Act or, as the case may be, the Indian Income-tax Act, 1922 (11 of 1922). (b)No loss referred to in sub-clause (ii) of clause (a) of sub- section (1) shall be carried forward under this section for more than four assessment years immediately succeeding the assessment year for which the loss was first computed under this Act." 1 The words "and such loss cannot be or is not wholly set off against income under any other head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, where he has no income under any other head" omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. ---------------------------------------------------------------------- 1.333 assessment year which is carried forward in accordance with the provisions of this section as it stood before the 1st day of April, 1988, shall be dealt with in the assessment year commencing on the 1st day of April, 1988, or any subsequent "assessment year as follows:-- (a) in so far as such loss relates to short-term capital assets, it shall be carried forward and set off in accordance with the provisions of sub-sections (1) and (2); (b) in so far as such loss relates to long-term capital assets, it shall be reduced by the deductions specified in sub-section (2) of section 48 and the reduced amount shall be carried forward and set off in accordance with the provisions of sub-section (1) but such carry forward shall not be allowed beyond the fourth assessment year immediately succeeding the assessment year for which the loss was first computed.] 1[74A. Losses from certain specified sources falling under the head "Income from other sources" 2[(1) Omitted by the Finance Act, 1986, w.e.f. 1-4-1987.] 3[(2) Omitted by the Finance Act, 1986, w.e.f. 1-4-1987.] 4[(3) 5[* * *] In the case of an assessee, being the owner of horses maintained by him for running in horse races (such horses being hereafter in this sub-section referred to as race horses), 6[the amount of loss incurred by the assessee in the activity of owning and maintaining race horses in any assessment year shall not be set off against income, if any, from any source other than the activity of owning and maintaining race horses in that year and] shall, subject to the other provisions of this chapter, be carried forward to the following assessment year and- ----------------------------------------------------------------------- 1 Inserted by the Finance Act, 1972, w.e.f. 1-4-1972. 2 Prior to the omission, sub-section (1), as amended by the Finance Act, 1974, w.e.f. 1-4-1975, read as under: "(1) Where the net result of the computation made for any assessment year in respect of any source falling under the head "Income from other sources" and being a source specified in sub- section (2), is a loss, such loss shall riot be set off against income, if any, from any other source under that head or against income under any other head.' 3 Prior to the omission, sub-section (2) read as under: "(2) The sources referred to in sub-section (1) are- (a)lotteries; (b)crossword puzzles; (c)races including horse races; (d)card games; (e)other games of any sort; (f)gambling or betting of any form or nature whatsoever not falling under any of the foregoing clauses." 4 Inserted by the Finance Act, 1974, w.e.f. 1-4-1975. 5 The words "Where for any assessment year" omitted by the Finance Act, 1986, w.e.f. 1-4-1987. 6 Substituted for "the net result of the computation in respect of the source, specified in clause (c) of sub-section (2) is a loss, then, so much of the amount of such loss as does not exceed the amount of loss incurred by the assessee in the activity of owning and maintaining race horses" ibid. ----------------------------------------------------------------------- 1.334 (a) it shall be set off against the income, if any, 1[from the activity of owning and maintaining race horses] assessable for that assessment year: Provided that the activity of owning and maintaining race horses is carried on by him in the previous year relevant for that assessment year; and (b) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on; so, however, that no portion of the loss shall be carried forward for more than four assessment years immediately succeeding the assessment year for which the loss was first computed. Explanation.-For the purposes of this sub-section- (a) "amount of loss incurred by the assessee in the activity of owning and maintaining race horses" means- (i)in a case where the assessee has no income by way of stake money, the amount of expenditure (not being in the nature of capital expenditure) laid out or expended by him wholly and exclusively for the purposes of maintaining race horses; (ii)in a case where the assessee has income by way of stake money, the amount by which such income falls short of the amount of expenditure (not being in the nature of capital expenditure) laid out or expended by the assessee wholly and exclusively for the purposes of maintaining race horses; (b) "horse race" means a horse race upon which wagering or betting may be lawfully made; (c) "income by way of stake money" means the gross amount of prize money received on a race horse or race horses by the owner thereof on account of the horse or horses or any one or more of the horses winning or being placed second or in any lower position in horse races.]
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