Section 74A — Race Horse Loss

Function in the statutory architecture

Only sub-section (3) of s. 74A survives; sub-sections (1) and (2) appear in the text as "[* * *]". It applies to an owner of horses maintained for running in horse races. The loss from the activity of owning and maintaining race horses in any assessment year cannot be set off against income from any other source. It is carried forward and set off against income from that activity in a later year, provided the activity is carried on in the previous year relevant to that year.

The loss is the revenue expenditure laid out wholly and exclusively for maintaining race horses where there is no stake money, or the amount by which stake money falls short of that expenditure. "Horse race" means a race on which wagering or betting may lawfully be made, and "income by way of stake money" is the gross prize money received for winning or being placed.

Operative consequences

• The race horse loss is ring-fenced: it can be absorbed only by income from owning and maintaining race horses.
• No portion of the loss can be carried forward for more than four assessment years after the year in which it was first computed.
• Capital expenditure does not enter the loss.
• Under s. 80, the loss is carried forward only if determined in pursuance of a return filed under s. 139(3).

Status

Operative for assessment year 2026-27 (sub-section (3) only). The Finance Act, 2026 does not amend s. 74A.

The Income-tax Act, 1961 governs assessment year 2026-27 and earlier years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject, the corresponding provision is s. 115, which calls the activity a "specified activity".