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CMA Intermediate · Direct and Indirect Taxation · Income from Other Sources

Under section 94 of the Income-tax Act, 2025, which of the following is correct about horse race winnings and horse owners?

Race winnings allow no deduction under section 94(4), but section 94(5) says this bar does not apply to the income of an owner of horses maintained for running in races from owning and maintaining those horses, so expenses can be considered there.

  1. ANo deduction is allowed against winnings from races, and this bar also applies to an owner's income from owning and maintaining horses for races
  2. BDeductions are allowed against race winnings of all persons but not against lottery winnings
  3. CNo deduction is allowed against race winnings, but the bar does not apply to an owner's income from owning and maintaining horses for running in racesCorrect
  4. DThe bar applies only if wagering on the race is unlawful

Explanation

Section 94(4) disallows deductions against winnings from races including horse races. Section 94(5) exempts from this bar the income of an owner of horses maintained for races from the activity of owning and maintaining them. So option 3 is right; option 1 ignores sub-section (5).

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