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CS Executive · Tax Laws and Practice · Clubbing Provisions and Set Off and Carry Forward of Losses

Ravi owns and maintains race horses. In a tax year, his stake money is Rs 6,00,000 and revenue expenditure wholly for maintaining the horses is Rs 9,00,000, with capital expenditure of Rs 4,00,000 on stables. Under section 115 of the Income-tax Act, 2025, the loss in the specified activity is:

The loss is Rs 3,00,000. Under section 115, the loss is the amount by which stake money falls short of non-capital expenditure on maintaining race horses. Stake money of Rs 6,00,000 less revenue expenditure of Rs 9,00,000 gives a shortfall of Rs 3,00,000, ignoring capital expenditure.

  1. ARs 3,00,000Correct
  2. BRs 7,00,000
  3. CRs 13,00,000
  4. DRs 10,00,000

Explanation

Section 115(4)(c) defines the loss as the shortfall of stake money against expenditure other than capital expenditure. So Rs 9,00,000 - Rs 6,00,000 = Rs 3,00,000. Including capital expenditure (Rs 13,00,000 - Rs 6,00,000 = Rs 7,00,000) is the key error.

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