Section 74A of Income Tax Act "Losses from certain specified sources falling under the head "Income from other sources""
74A. (1) [* * *]
(2) [* * *]
(3) 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), 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-
(a) it shall be set off against the income, if any, 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.