Section 115: set off and carry forward of losses from specified activity (race horses)

Set off only against income from the same activity

Any loss incurred by the assessee in a specified activity in a tax year can be set off only against income from that specified activity.

Carry forward, and the four-year limit

Where the loss cannot be wholly set off in the same tax year, the balance is carried forward to the following tax year and set off against income from the specified activity carried on in that year, and so on if any amount still remains unabsorbed.

No such loss can be carried forward under this section for more than four tax years immediately succeeding the tax year for which the loss was first computed.

Key definitions

The section defines several terms specific to this activity:

• "Horse race" means a horse race upon which wagering or betting may be lawfully made.
• "Income by way of stake money" means the gross amount of prize money received on a race horse or race horses by the owner on account of the horse(s) winning a particular position in a horse race.
• "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 exclusively for maintaining race horses.
• "Race horses" means horses owned and maintained by the assessee for running in a horse race.
• "Specified activity" means the activity of owning and maintaining race horses.

Frequently asked questions