Section 115 — Specified Activity Loss | ITA 2025

Section 115 — SPECIFIED-ACTIVITY LOSS (TONNAGE-TAX-STYLE COMPARTMENT)

Section 115 is the substantive equivalent of 1961 s. 73B / s. 115VC-VR (Tonnage Tax) carry-forward rules. It creates a SEPARATE COMPARTMENT for losses from 'specified activities' — typically tonnage-tax shipping / racehorse owning / etc. — that may be set off ONLY against income from another specified activity. Carry-forward limits as prescribed (typically 4 / 8 years depending on activity-type). Compartmentalisation is a recurring theme in Chapter VII: speculation (s. 113), specified-business (s. 114), specified-activity (s. 115).

Statutory text — Income-tax Act, 2025

Marginal note — Set off and carry forward of losses from specified activity

(1) Any loss incurred by the assessee in specified activity in any tax year shall be set off only against income from specified activity.

(2) Where for any tax year, loss computed in respect of a specified activity cannot be wholly set off under sub-section (1), so much of the loss not so set off or the whole loss, as the case may be, shall be carried forward to the following tax year and—

(i) be set off against the income, if any, of the specified activity carried on by him for such tax year; and

(ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following tax year and so on.

(3) No loss shall be carried forward under this section for more than four tax years immediately succeeding the tax year for which the loss was first computed.

(4) For the purposes of this section—

(a) “horse race” means a horse race upon which wagering or betting may be lawfully made;

(b) “income by way of stake money” means the gross amount of prize money received on a race horse or race horses by the owner thereof on account of the horse or horses or any one or more of the horses winning a par- ticular position in horse race;

(c) “loss incurred by the assessee in specified activity” means the amount by which the income by way of stake money, if any, falls short of the expenditure, not being capital expenditure, incurred wholly and exclu- sively for maintaining race horses;

(d) “race horses” means horses owned and maintained by assessee for run- ning in a horse race;

(e) “specified activity” means the activity of owning and maintaining race horses. Treatment of accumulated losses and unabsorbed depreciation in amalgamation or demerger, etc.

Corresponding provision — 1961 regime

INCOME-TAX ACT, 2025	INCOME-TAX ACT, 1961
INCOME-TAX ACT, 2025 — s. 115	INCOME-TAX ACT, 1961
Specified-activity loss only against specified-activity profit	1961 ss. 73B / 74A / 115VR (tonnage tax)
Carry-forward time-limits per activity	Same

PLANNING NOTES

(i) Tonnage-tax shipping companies (s. 116 PGBP-equivalent specified-activity) have isolated loss treatment. (ii) For racehorse-ownership business (1961 s. 74A), loss compartment historical; verify s. 115 inclusion. (iii) For lottery / horse-race / gambling LOSSES — NOT loss-set-off-permitted at all (s. 94 disallowance plus s. 115 isolation).

CROSS-REFERENCES

Section 113 / 114 — Other compartmentalised loss sections.
Tonnage-tax regime — Chapter XIII Special Provisions.

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