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TMI BlogTreatment of losses incurred in the activity of owning and maintaining race horses : Clause 115 of Income Tax Bill, 2025 Vs. Section 74A of Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... nt behind these provisions is to provide a specific framework for taxpayers involved in the niche activity of horse racing, which is a distinct category under the broader head of "Income from other sources." Objective and Purpose The primary objective of Clause 115 and Section 74A is to regulate the financial treatment of losses incurred in the specified activity of horse racing. The legislative intent is to ensure that losses from such activities are not set off against income from other sources, thereby maintaining a clear demarcation between different income streams. This is particularly important given the unique nature of the horse racing industry, which involves significant financial risks and expenditures. Historical Background T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r tax years immediately succeeding the year in which the loss was first computed. This provision encourages taxpayers to manage their financial affairs efficiently and limits the indefinite deferral of losses. 4. Definitions and Clarifications: - Subsection (4) provides definitions for key terms such as "income by way of stake money," "loss incurred by the assessee in the specified activity," "race horse," and "specified activity." These definitions are crucial for ensuring clarity and consistency in the application of the provision. Comparison with Section 74A of Income-tax Act, 1961 Section 74A of the Income-tax Act, 1961, serves a similar purpose as Clause 115 but with some differences in structure and wording. A comparison of the tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssitates meticulous record-keeping and documentation to substantiate claims of losses and ensure eligibility for carry forward. 3. Impact on Industry: - The restrictions on set-off and carry forward may influence investment decisions within the horse racing industry, as stakeholders must account for the potential financial implications of these tax provisions. Comparative Analysis with Other Jurisdictions While the provisions under Indian law are specific to the horse racing industry, similar frameworks exist in other jurisdictions, albeit with variations in detail and application. A comparative analysis reveals: 1. International Approaches: - Some jurisdictions may allow broader set-off provisions, while others impose stricter limit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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