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CS Executive · Tax Laws and Practice · Income from Other Sources

Mr. Vikram Singh owns racehorses maintained for running in horse races on which wagering may be lawfully made. He also won a card game prize this year. Under the Income-tax Act, 2025, which statement is correct about expenditure deductions?

Horse maintenance expenditure is deductible for the activity of owning and maintaining racehorses, but nothing is deductible against card game winnings. Section 94(4) disallows deductions for winnings, and section 94(5) carves out the horse owner's maintenance activity from that prohibition.

  1. AExpenditure on maintaining his horses is deductible from the income of that activity, but no expenditure is deductible against card game winningsCorrect
  2. BNo expenditure is deductible against either income
  3. CExpenditure is deductible against both incomes up to 50% of the income
  4. DExpenditure on horse maintenance is deductible only if he also wins a race prize

Explanation

Section 94(4) bars all deductions against winnings from games, races, gambling and betting. Section 94(5) exempts a horse owner from that bar for income from owning and maintaining horses for races. So maintenance expenses are deductible for that activity, while card game winnings get no deduction.

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