TaxTMI 
TaxTMI 
1988 (5) TMI 66
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....s of Rs. 99,328 and long-term capital gains of Rs. 2,167 arising out of sale of race horses during the previous year relevant to the assessment year 1980-81, in contravention of the provisions of section 74A(3) of the Income-tax Act, 1961. 2. That, on the facts and in the circumstances of the case, the learned Commissioner of Income-tax (Appeals) ought to have confirmed the decision of the Income-tax Officer in not allowing the setting off of the carried forward loss in 'Horse Racing' under the head 'Other sources' relating to the assessment years 1976-77 to 1979-80 against short-term capital gains of Rs. 99,328 and long-term capital gains of Rs. 2,167 on sale of race horses during the previous year relevant to the assessment year 1980-81.....
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....sessee to set off the current year's profit of Rs. 99,328 earned on the sale of race horses against the determined losses of the earlier years from horse races. 3. The assessee appealed to the CIT(A) and contended that the action of the ITO was not justified. The CIT(A) held that the claim of the assessee is admissible. According to him, the income earned by the assessee on the sale of horses, was business income and so the same should have been set off against the brought forward losses from the activity of dealing in race horses. He directed the ITO accordingly. 4. Shri N.K. Saxena, the learned representative for the department, urged before us that the CIT(A) erred in his decision. He relied on the Commentary on Income-tax Law by Sampa....
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....in section 74A(2)(c). Hence, the department cannot now turn round and say that there are two different sources of income envisaged under section 74A(2)(c). Even assuming so, for the sake of argument, both those activities come under section 74A(2)(c) and the losses of the earlier years have been determined under that head. That being the position, the said losses have to be brought forward and set off against the profits in any of the activities falling under section 74A(2)(c). The sale of race horses is one such activity which comes under that item and so the profit earned during the year under consideration on the sale of race horses has to be set off against the losses arising under section 74A(2)(c) as determined in the earlier years. H....