CHAPTER VI
AGGREGATION OF INCOME AND SET
OFF OR CARRY FORWARD OF LOSS
Aggregation of income
66. In computing the total income of an assessee, there shall be included all income on which no income-tax is payable under Chapter VII [* * *].
Method of computing a partner’s share in the income of the firm.
67. [Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]
[Method of computing a member’s share in income of association of
persons or body of individuals.
67A. (1) In computing the total income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known [other than a company or a cooperative society or a society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India], whether the net result of the computation of the total income of such association or body is a profit or a loss, his share (whether a net profit or net loss) shall be computed as follows, namely :—
(a) any interest, salary, bonus, commission or remuneration by whatever name called, paid to any member in respect of the previous year shall be deducted from the total income of the association or body and the balance ascertained and apportioned among the members in the proportions in which they are entitled to share in the income of the association or body ;
(b) where the amount apportioned to a member under clause (a) is a profit, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be added to that amount, and the result shall be treated as the member’s share in the income of the association or body ;
(c) where the amount apportioned to a member under clause (a) is a loss, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be adjusted against that amount, and the result shall be treated as the member’s share in the income of the association or body.
(2) The share of a member in the income or loss of the association or body, as computed under sub-section (1), shall, for the purposes of assessment, be apportioned under the various heads of income in the same manner in which the income or loss of the association or body has been determined under each head of income.
(3) Any interest paid by a member on capital borrowed by him for the purposes of investment in the association or body shall, in computing his share chargeable under the head “Profits and gains of business or profession” in respect of his share in the income of the association or body, be deducted from his share.
Explanation.—In this section, “paid” has the same meaning as is assigned to it in clause (2) of section 43.]
68. Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.
69.Where in the financial year immediately preceding the assessment year the assessee has made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year.
69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year.]
[Amount
of investments, etc., not fully disclosed in books of account.
69B. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the [Assessing] Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year.]
[Unexplained expenditure, etc.
69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year :]
[Provided that, notwithstanding anything contained in any other provision of this Act, such unexplained expenditure which is deemed to be the income of the assessee shall not be allowed as a deduction under any head of income.]
[Amount
borrowed or repaid on hundi.
69D. Where any amount is borrowed on a hundi from, or any amount due thereon is repaid to, any person otherwise than through an account payee cheque drawn on a bank, the amount so borrowed or repaid shall be deemed to be the income of the person borrowing or repaying the amount aforesaid for the previous year in which the amount was borrowed or repaid, as the case may be :
Provided that, if in any case any amount borrowed on a hundi has been deemed under the provisions of this section to be the income of any person, such person shall not be liable to be assessed again in respect of such amount under the provisions of this section on repayment of such amount.
Explanation.—For the purposes of this section, the amount repaid shall include the amount of interest paid on the amount borrowed.]
Set off, or carry forward and set off
[Set
off of loss from one source against income from another source under the same
head of income.
70. (1) Save as otherwise provided in this Act, where the net result for any assessment year in respect of any source falling under any head of income, other than “Capital gains”, is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head.
(2) Where the result of the computation made for any assessment year under sections 48 to 55 in respect of any short-term capital asset is a loss, the assessee shall be entitled to have the amount of such loss set off against the income, if any, as arrived at under a similar computation made for the assessment year in respect of any other capital asset.
(3) Where the result of the computation made for any assessment year under sections 48 to 55 in respect of any capital asset (other than a short-term capital asset) is a loss, the assessee shall be entitled to have the amount of such loss set off against the income, if any, as arrived at under a similar computation made for the assessment year in respect of any other capital asset not being a short-term capital asset.]
[Set
off of loss from one head against income from another.
71. (1) Where in respect of any assessment year the net result of the computation under any head of income, other than “Capital gains”, is a loss and the assessee has no income under the head “Capital gains”, he shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head.
(2) Where in respect of any assessment year, the net result of the computation under any head of income, other than “Capital gains”, is a loss and the assessee has income assessable under the head “Capital gains”, such loss may, subject to the provisions of this Chapter, be set off against his income, if any, assessable for that assessment year under any head of income including the head “Capital gains” (whether relating to short-term capital assets or any other capital assets).
[(2A)
Notwithstanding anything contained in sub-section (1) or sub-section (2), where
in respect of any assessment year, the net result of the computation under the
head “Profits and gains of business or profession” is a loss and the assessee has income assessable under the head “Salaries”,
the assessee shall not be entitled to have such loss
set off against such income.]
(3) Where in respect of any assessment year, the net result of the computation under the head “Capital gains” is a loss and the assessee has income assessable under any other head of income, the assessee shall not be entitled to have such loss set off against income under the other head.]
[(4) Where the net result of the computation under the head “Income from house property” is a loss, in respect of the assessment years commencing on the 1st day of April, 1995 and the 1st day of April, 1996, such loss shall be first set off under sub-sections (1) and (2) and thereafter the loss referred to in section 71A shall be set off in the relevant assessment year in accordance with the provisions of that section.]
[Transitional provisions for set off of loss under the head “Income
from house property”.
71A. Where in respect of the assessment year commencing on the 1st day of April, 1993 or the 1st day of April, 1994, the net result of the computation under the head “Income from house property” is a loss, such loss in so far as it relates to interest on borrowed capital referred to in clause (vi) of sub-section (1) of section 24 and to the extent it has not been set off shall be carried forward and set off in the assessment year commencing on the 1st day of April, 1995, and the balance, if any, in the assessment year commencing on the 1st day of April, 1996, against the income under any head.]
[Carry
forward and set off of loss from house property.
71B. Where for any assessment year the net result of computation under the head “Income from house property” is a loss to the assessee and such loss cannot be or is not wholly set off against income from any other head of income in accordance with the provisions of section 71, so much of the loss as has not been so set-off or where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year and—
(i) be set off against the income from house property assessable for that assessment year; and
(ii) the loss, if any, which has not been set off wholly, the amount of loss not so set off,
shall be carried forward to the following assessment year, not being more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.]
Carry forward and set off of business
losses.
72. [(1) Where for any assessment year, the net result of the computation under the head “Profits and gains of business or profession” is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, [* * *] where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and—
(i) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year ;
[* * *]
(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 assessment year and so on :]
[Provided that where the whole or any part of such loss is sustained in any such business as is referred to in section 33B which is discontinued in the circumstances specified in that section, and, thereafter, at any time before the expiry of the period of three years referred to in that section, such business is re-established, reconstructed or revived by the assessee, so much of the loss as is attributable to such business shall be carried forward to the assessment year relevant to the previous year in which the business is so re-established, reconstructed or revived, and—
(a) it shall be set off against the profits and gains, if any, of that business or any other business carried on by him and assessable for that assessment year ; and
(b) if the loss cannot be wholly so set off, the amount of loss not so set off shall, in case the business so re-established, reconstructed or revived continues to be carried on by the assessee, be carried forward to the following assessment year and so on for seven assessment years immediately succeeding.]
(2) Where any allowance or part thereof is, under sub-section (2) of section 32 or sub-section (4) of section 35, to be carried forward, effect shall first be given to the provisions of this section.
(3) No loss [(other than the loss referred to in the proviso to sub-section (1) of this section)] shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.
72A. [(1) Where there has been an
amalgamation of a company owning an industrial undertaking or a ship or a hotel
with another company or an amalgamation of a banking company referred to in
clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949)
with a specified bank, then, notwithstanding anything contained in any other
provision of this Act, the accumulated loss and the unabsorbed depreciation of
the amalgamating company shall be deemed to be the loss or, as the case may be,
allowance for depreciation of the amalgamated company for the previous year in
which the amalgamation was effected, and other provisions of this Act relating
to set off and carry forward of loss and allowance for depreciation shall apply
accordingly.
The following sub-section (1) shall be
substituted for existing sub-section (1) of section 72A by the Finance Act,
2007, w.e.f. 1-4-2008 :
(1) Where there has been an amalgamation of—
(a) a company
owning an industrial undertaking or a ship or a hotel with another company; or
(b) a banking company referred to in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949) with a specified bank; or
(c) one or more
public sector company or companies engaged in the business of operation of
aircraft with one or more public sector company or companies engaged in similar
business,
then,
notwithstanding anything contained in any other provision of this Act, the
accumulated loss and the unabsorbed depreciation of the amalgamating company
shall be deemed to be the loss or, as the case may be, allowance for unabsorbed
depreciation of the amalgamated company for the previous year in which the
amalgamation was effected, and other provisions of this Act relating to set off
and carry forward of loss and allowance for depreciation shall apply
accordingly.
(2) Notwithstanding anything contained in sub-section (1), the accumulated loss shall not be set off or carried forward and the unabsorbed depreciation shall not be allowed in the assessment of the amalgamated company unless—
(a) the amalgamating company—
(i) has been engaged in
the business, in which the accumulated loss occurred or depreciation remains
unabsorbed, for three or more years;
(ii) has held continuously as on the date of the amalgamation at least three-fourths of the book value of fixed assets held by it two years prior to the date of amalgamation;
(b) the amalgamated company—
(i) holds continuously for a minimum period of five years from the date of amalgamation at least three-fourths of the book value of fixed assets of the amalgamating company acquired in a scheme of amalgamation;
(ii) continues the business of the amalgamating company for a minimum period of five years from the date of amalgamation;
(iii) fulfils such other conditions as may be prescribed to ensure the revival of the business of the amalgamating company or to ensure that the amalgamation is for genuine business purpose.]
(3) In a case where any of the conditions laid down in sub-section (2) are not complied with, the set off of loss or allowance of depreciation made in any previous year in the hands of the amalgamated company shall be deemed to be the income of the amalgamated company chargeable to tax for the year in which such conditions are not complied with.
(4) Notwithstanding anything contained in any other provisions of this Act, in the case of a demerger, the accumulated loss and the allowance for unabsorbed depreciation of the demerged company shall—
(a) where such loss or unabsorbed depreciation is directly relatable to the undertakings transferred to the resulting company, be allowed to be carried forward and set off in the hands of the resulting company;
(b) where such loss or unabsorbed depreciation is not directly relatable to the undertakings transferred to the resulting company, be apportioned between the demerged company and the resulting company in the same proportion in which the assets of the undertakings have been retained by the demerged company and transferred to the resulting company, and be allowed to be carried forward and set off in the hands of the demerged company or the resulting company, as the case may be.
(5) The Central
Government may, for the purposes of this Act, by notification in the Official
Gazette, specify such conditions as it considers necessary to ensure that the
demerger is for genuine business purposes.
(6) Where there has been reorganisation of business, whereby, a firm is succeeded by a company fulfilling the conditions laid down in clause (xiii) of section 47 or a proprietary concern is succeeded by a company fulfilling the conditions laid down in clause (xiv) of section 47, then, notwithstanding anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the predecessor firm or the proprietary concern, as the case may be, shall be deemed to be the loss or allowance for depreciation of the successor company for the purpose of previous year in which business reorganisation was effected and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordingly :
Provided that if any of the conditions laid down in the proviso to clause (xiii) or the proviso to clause (xiv) to section 47 are not complied with, the set off of loss or allowance of depreciation made in any previous year in the hands of the successor company, shall be deemed to be the income of the company chargeable to tax in the year in which such conditions are not complied with.
(7) For the purposes of this section,—
(a) “accumulated loss” means so much of the loss of the predecessor firm or the proprietary concern or the amalgamating company or the demerged company, as the case may be, under the head “Profits and gains of business or profession” (not being a loss sustained in a speculation business) which such predecessor firm or the proprietary concern or amalgamating company or demerged company, would have been entitled to carry forward and set off under the provisions of section 72 if the reorganisation of business or amalgamation or demerger had not taken place;
[(aa) “industrial undertaking” means any undertaking which is engaged in—
(i) the manufacture or processing of goods; or
(ii) the manufacture of computer software; or
(iii) the business of generation or distribution of electricity or any other form of power; or
[(iiia) the business of providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services; or]
(iv) mining; or
(v) the construction of ships, aircrafts or rail systems;]
(b) “unabsorbed depreciation” means so much of the allowance for depreciation of the predecessor firm or the proprietary concern or the amalgamating company or the demerged company, as the case may be, which remains to be allowed and which would have been allowed to the predecessor firm or the proprietary concern or amalgamating company or demerged company, as the case may be, under the provisions of this Act, if the reorganisation of business or amalgamation or demerger had not taken place;]
[(c) “specified
bank” means the State Bank of India constituted under the State Bank of India
Act, 1955 (23 of 1955) or a subsidiary bank as defined in the State Bank of
India (Subsidiary Banks) Act, 1959 (38 of 1959) or a corresponding new bank
constituted under section 3 of the Banking Companies (Acquisition and Transfer of
Undertakings) Act, 1970 (5 of 1970) or under section 3 of the Banking Companies
(Acquisition and Transfer of Undertakings) Act, 1980 (40 of 1980).]
72AA. Notwithstanding anything contained in sub-clauses (i) to (iii) of clause (1B) of section 2 or section 72A, where there has been an amalgamation of a banking company with any other banking institution under a scheme sanctioned and brought into force by the Central Government under sub-section (7) of section 45 of the Banking Regulation Act, 1949 (10 of 1949), the accumulated loss and the unabsorbed depreciation of such banking company shall be deemed to be the loss or, as the case may be, allowance for depreciation of such banking institution for the previous year in which the scheme of amalgamation was brought into force and other provisions of this Act relating to set-off and carry forward of loss and allowance for depreciation shall apply accordingly.
Explanation.—For the purposes of this section,—
(i) “accumulated loss” means so much of the loss of the amalgamating banking company under the head “Profits and gains of business or profession” (not being a loss sustained in a speculation business) which such amalgamating banking company, would have been entitled to carry forward and set-off under the provisions of section 72 if the amalgamation had not taken place;
(ii) “banking company” shall have the same meaning assigned to it in clause (c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949);
(iii) “banking institution” shall have the same meaning assigned to it in sub-section (15) of section 45 of the Banking Regulation Act, 1949 (10 of 1949);
(iv) “unabsorbed depreciation” means so much
of the allowance for depreciation of the amalgamating banking company which
remains to be allowed and which would have been allowed to such banking company
if amalgamation had not taken place.]
The following section 72AB
shall be inserted after section 72AA by the Finance Act, 2007, w.e.f. 1-4-2008 :
72AB.
(1) The assessee,
being a successor co-operative bank, shall, in a case where the amalgamation
has taken place during the previous year, be allowed to set off the accumulated
loss and the unabsorbed depreciation, if any, of the predecessor co-operative
bank as if the amalgamation had not taken place, and all the other provisions
of this Act relating to set off and carry forward of loss and allowance for
depreciation shall apply accordingly.
(2)
The provisions of this section shall apply if—
(a) the predecessor co-operative bank—
(i) has been engaged in
the business of banking for three or more years; and
(ii) has held at least three-fourths of the book value of fixed
assets as on the date of the business reorganisation,
continuously for two years prior to the date of business reorganisation;
(b) the successor co-operative bank—
(i) holds at least
three-fourths of the book value of fixed assets of the predecessor co-operative
bank acquired through business reorganisation,
continuously for a minimum period of five years immediately succeeding the date
of business reorganisation;
(ii) continues the business of the predecessor co-operative bank
for a minimum period of five years from the date of business reorganisation; and
(iii) fulfils such other conditions as may be prescribed to ensure
the revival of the business of the predecessor co-operative bank or to ensure
that the business reorganisation is for genuine
business purpose.
(3)
The amount of set-off of the accumulated loss and unabsorbed depreciation, if
any, allowable to the assessee being a resulting
co-operative bank shall be,—
(i) the accumulated loss or unabsorbed depreciation of the demerged co-operative bank if the whole of the amount of
such loss or unabsorbed depreciation is directly relatable to the undertakings
transferred to the resulting co-operative bank; or
(ii) the amount
which bears the same proportion to the accumulated loss or unabsorbed
depreciation of the demerged co-operative bank as the
assets of the undertaking transferred to the resulting co-operative bank bears
to the assets of the demerged co-operative bank if
such accumulated loss or unabsorbed depreciation is not directly relatable to
the undertakings transferred to the resulting co-operative bank.
(4)
The Central Government may, for the purposes of this section, by notification in the Official Gazette,
specify such other conditions as it considers necessary, other than those
prescribed under sub-clause (iii) of clause (b) of sub-section
(2), to ensure that the business reorganization is for genuine business
purposes.
(5)
The period commencing from the beginning of the previous year and ending on the
date immediately preceding the date of business reorganization, and the period
commencing from the date of such business reorganisation
and ending with the previous year shall be deemed to be two different previous
years for the purposes of set off and carry forward of loss and allowance for
depreciation.
(6)
In a case where the conditions specified in sub-section (2) or notified under
sub-section (4) are not complied with, the set off of accumulated loss or
unabsorbed depreciation allowed in any previous year to the successor
co-operative bank shall be deemed to be the income of the successor
co-operative bank chargeable to tax for the year in which the conditions are
not complied with.
(7)
For the purposes of this section,—
(a) “accumulated loss”
means so much of loss of the amalgamating co-operative bank or the demerged co-operative bank, as the case may be, under the
head “Profits and gains of business or profession” (not being a loss sustained
in a speculation business) which such amalgamating co-operative bank or the demerged co-operative bank, would have been entitled to
carry forward and set-off under the provisions of section 72 as if the business
reorganisation had not taken place;
(b) “unabsorbed
depreciation” means so much of the allowance for depreciation of the
amalgamating co-operative bank or the demerged
co-operative bank, as the case may be, which remains to be allowed and which
would have been allowed to such bank as if the business reorganisation
had not taken place;
(c) the expressions “amalgamated co-operative bank”, “amalgamating co-operative bank”, “amalgamation”, “business reorganisation”, “co-operative bank”, “demerged co-operative bank”, “demerger”, “predecessor co-operative bank”, “successor co-operative bank” and “resulting co-operative bank” shall have the meanings respectively assigned to them in section 44DB.
Losses in speculation business.
73.(1) Any loss, computed in respect of a speculation business carried on by the assessee, shall not be set off except against profits and gains, if any, of another speculation business.
(2) Where for any assessment year any loss computed in respect of a speculation business has not been wholly set off under sub-section (1), so much of the loss as is not so set off or the whole loss where the assessee had no income from any other speculation business, shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and—
(i) it shall be set off against the profits and gains, if any, of any speculation business carried on by him assessable for that assessment 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 assessment year and so on.
(3) In respect of allowance on account of depreciation or capital expenditure on scientific research, the provisions of sub-section (2) of section 72 shall apply in relation to speculation business as they apply in relation to any other business.
(4) No loss shall be carried forward under this section for more than [four] assessment years immediately succeeding the assessment year for which the loss was first computed.
[Explanation.—Where any part of the
business of a company ( [other than a company whose gross total income
consists mainly of income which is chargeable under the heads “Interest on
securities”, “Income from house property”, “Capital gains” and “Income from
other sources”], or a company the principal business of which is the business
of banking or the granting of loans and advances) consists in the purchase and
sale of shares of other companies, such company shall, for the purposes of this
section, be deemed to be carrying on a speculation business to the extent to
which the business consists of the purchase and sale of such shares.]
[Losses under
the head “Capital gains”.
74. [(1) Where in respect of any assessment year, the net
result of the computation under the head “Capital gains” is a loss to the assessee, the whole loss shall, subject to the other provisions
of this Chapter, be carried forward to the following assessment year, and—
(a) in so far as such loss relates to a short-term capital asset, it shall be set off against income, if any, under the head “Capital gains” assessable for that assessment year in respect of any other capital asset;
(b) in so far as such loss relates to a long-term capital asset, it shall be set off against income, if any, under the head “Capital gains” assessable for that assessment year in respect of any other capital asset not being a short-term capital asset;
(c) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on.]
(2) No loss shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.
(3) [Omitted by the Finance Act, 2002, w.e.f.
1-4-2003.]]
[Losses from certain specified sources falling under the head
“Income from other sources”.
74A.(1) [* * *]
(2) [* * *]
[(3) [* * *] In the case of an assessee, being the owner of horses maintained by him for running in horse races (such horses being hereafter in this sub-section referred to as race horses), [the amount of loss incurred by the assessee in the activity of owning and maintaining race horses in any assessment year shall not be set off against income, if any, from any source other than the activity of owning and maintaining race horses in that year and] shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year and—
(a) it shall be set off against the income, if any, [from the activity of own-ing and maintaining race horses] assessable for that assessment year :
Provided that the activity of owning and maintaining race horses is carried on by him in the previous year relevant for that assessment year ; and
(b) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on; so, however, that no portion of the loss shall be carried forward for more than four assessment years immediately succeeding the assessment year for which the loss was first computed.
Explanation.—For the purposes of this sub-section—
(a) “amount of loss incurred by the assessee in the activity of owning and maintaining race horses” means—
(i) in a case where the assessee has no income by way of stake money, the amount of expenditure (not being in the nature of capital expenditure) laid out or expended by him wholly and exclusively for the purposes of maintaining race horses ;
(ii) in a case where the assessee has income by way of stake money, the amount by which such income falls short of the amount of expenditure (not being in the nature of capital expenditure) laid out or expended by the assessee wholly and exclusively for the purposes of maintaining race horses ;
(b) “horse race” means a horse race upon which wagering or betting may be lawfully made ;
(c) “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 or being placed second or in any lower position in horse races.]
75. Where the assessee is a firm, any loss in relation to the assessment year commencing on or before the 1st day of April, 1992, which could not be set off against any other income of the firm and which had been apportioned to a partner of the firm but could not be set off by such partner prior to the assessment year commencing on the 1st day of April, 1993, then, such loss shall be allowed to be set off against the income of the firm subject to the condition that the partner continues in the said firm and to be carried forward for set off under sections 70, 71, 72, 73, 74 and 74A.]
76. [OMITTED BY THE FINANCE ACT, 1992, W.E.F. 1-4-1993]
77. [OMITTED BY THE FINANCE ACT, 1992, W.E.F. 1-4-1993]
Carry forward and set off of losses in case
of change in constitution of firm or on succession.
78. [(1) Where a change has occurred in the constitution of a firm, nothing in this Chapter shall entitle the firm to have carried forward and set off so much of the loss proportionate to the share of a retired or deceased partner as exceeds his share of profits, if any, in the firm in respect of the previous year.]
(2) Where any person carrying on any business or profession has been succeeded in such capacity by another person otherwise than by inheritance, nothing in this Chapter shall entitle any person other than the person incurring the loss to have it carried forward and set off against his income.
Carry forward and set off of losses in the
case of certain companies.
79. Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place in a previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year unless—
(a) on the last day of the previous year the shares of the company carrying not less than fifty-one per cent of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent of the voting power on the last day of the year or years in which the loss was incurred [* * *] :
[Provided that nothing contained in this section shall apply to a case where a change in the said voting power takes place in a previous year consequent upon the death of a shareholder or on account of transfer of shares by way of gift to any relative of the shareholder making such gift :]
[Provided further that nothing contained in this section shall apply to any change in the shareholding of an Indian company which is a subsidiary of a foreign company as a result of amalgamation or demerger of a foreign company subject to the condition that fifty-one per cent shareholders of the amalgamating or demerged foreign company continue to be the shareholders of the amalgamated or the resulting foreign company.]
(b) [Omitted by the Finance Act, 1988, w.e.f. 1-4-1989.]
Submission of return for losses.
80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed [in accordance with the provisions of sub-section (3) of section 139], shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) [or sub-section (3)] of section 74 [or sub-section (3) of section 74A].