Comparison of Section 114 "Set off and carry forward of losses computed in respect of specified business." between the Income-Tax Act, 2025 (as passed) and the Income-Tax Bill, 2025 (as originally introduced)

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....off solely against future profits of specified businesses. The provision matters to taxpayers carrying on activities classified as specified businesses and to tax administration implementing set-off/carry-forward rules. Effective date or decision date: Not stated in the document. Background & Scope Statutory hooks: Clause 114 interacts with the Income Tax Bill, 2025 and cross-references "specified business" as referred to in section 46. The clause falls under the Part titled "SET OFF, OR CARRY FORWARD AND SET OFF OF LOSSES." The provision governs inter-year treatment of losses arising from businesses designated as "specified business." Definitions provided within the clause (sub-section (3)) include: * "specified business" - any specifi....

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....able only against profits from other specified businesses in the same or subsequent years. The presence of a definitional sub-section suggests legislative intent to ensure internal consistency and to enable precise identification of losses that qualify for the rule. The phrase "only against" is restrictive and signals a textual limitation rather than a permissive guideline. Exceptions/Provisos Not stated in the document: any provisos, exemptions, or conditions permitting broader set-off (for example, against other heads of income) are not provided in Clause 114. Any exceptions must be sought elsewhere in the Bill or Act. Illustrations * Example 1: Assessee A carries on Specified Business X in tax year T and incurs a loss of INR 10 lakh....

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....a "specified business," but they differ in form, detail and definitional clarity. * Definitions: Document 2 expressly defines "specified business" and "unabsorbed loss from the specified business" in a subsection (3). Document 1 omits these definitions in the text shown and instead cross-references "specified business, referred to in section 46." * Practical impact: The Bill's explicit definitions remove ambiguity about terminology within Clause 114 itself; reliance on cross-reference (Document 1) requires reading section 46 for precise scope. * Expression of set-off rule: Document 2 states losses "shall be set off only against profits and gains, if any, of any other specified business for the said tax year." Document 1 states the....

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....m the specified business;" Document 1 uses plain language "so much of the loss not so set off or the whole loss ... shall be carried forward." * Practical impact: The defined term in Document 2 aids drafting precision and facilitates cross-references elsewhere in legislation and subordinate instruments. Practical Implications * Compliance and risk: Taxpayers carrying on activities classified as specified businesses must segregate profits and losses arising from specified businesses from other income heads to ensure proper application of the restricted set-off. Failure to segregate may result in erroneous set-off and subsequent adjustments. * Record-keeping/evidence: The text implies recording of computation of losses "computed in res....