Set off and carry forward of losses
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
30 August 2012
Under the provisions of the Income Tax Act, 1961, can an assessee set off his business losses with the income from winnings from lotteries and crossword puzzles?
Please provide the reference to the Section of Income Tax Act, 1961 and case studies supporting your answer.
Please do help if possible..
Waiting for your valuable reply..
Please provide the reference to the Section of Income Tax Act, 1961 and case studies supporting your answer.
Please do help if possible..
Waiting for your valuable reply..
30 August 2012
No.
Such income has to be assessed u/s 115BB(i) @ 30 %. Corollary to sub section (ii) gives strength to the effect that no deduction / allowances will be allowed against the income referred in sub section (i).
Kerala High Court in the case of Manjoo & Co (195 Taxman 39) has said that 115BB is a special provision ,irrespective as to under which head the income would fall ,which reiterates exclusion of section 72 for the assessment u/s 115BB.
Such income has to be assessed u/s 115BB(i) @ 30 %. Corollary to sub section (ii) gives strength to the effect that no deduction / allowances will be allowed against the income referred in sub section (i).
Kerala High Court in the case of Manjoo & Co (195 Taxman 39) has said that 115BB is a special provision ,irrespective as to under which head the income would fall ,which reiterates exclusion of section 72 for the assessment u/s 115BB.
Querist : Anonymous
Querist :
Anonymous
(Querist)
30 August 2012
Is it specifically mentioned in the Income Tax Act, 1961 that any loss can not be carried forward with winnings from lotteries & crossword puzzles..??
What will be the treatment of such income from winnings from lotteries & crossword puzzles under section 70 & 71...?
What will be the treatment of such income from winnings from lotteries & crossword puzzles under section 70 & 71...?
25 July 2025
Your question is whether business losses (or any other loss) can be set off or carried forward against income from winnings from lotteries, crossword puzzles, etc., under the Income Tax Act, 1961.
Let’s give you a clear answer — with legal sections, case law, and interpretation.
✅ Short Answer:
No, business loss or any other loss cannot be set off or carried forward against income from lotteries, crossword puzzles, races (including horse races), card games, betting, gambling, etc.
⚖️ Legal Provision — Section 115BB & Section 58(4):
📘 Section 115BB – Tax on winnings from lotteries, etc.
Income from such winnings is taxed at a flat rate of 30% (plus cess and surcharge).
The section overrides all other provisions — i.e., it is a special charging section.
“Notwithstanding anything contained in any other provisions of this Act...”
📘 Section 58(4) — No Deduction Allowed
“No deduction shall be allowed in computing the income by way of winnings from lotteries, crossword puzzles...”
That means:
No expenditure, allowance, or loss (including brought forward losses) can be claimed against such income.
🧾 Also, Section 70 & 71 (Set-off of losses) do not override Section 115BB:
Section 70 allows intra-head set-off (e.g., business loss with other business income).
Section 71 allows inter-head set-off (e.g., business loss with income from other sources).
BUT:
❌ These are general provisions, and cannot override special provisions like Section 115BB.
📚 Judicial Precedents:
✅ Kerala High Court in Manjoo & Co. v. CIT (195 Taxman 39)
Held that:
“Income from lottery is taxable under section 115BB at a flat rate and cannot be reduced by any loss incurred under any other head of income, including business losses.”
✅ CIT v. K. Chinna Krishna Chetty (246 ITR 121 – Madras HC)
Held:
Income from lottery is taxable in full without allowing set-off of business loss.
Important Note:
Even brought forward business losses (Sec 72) or unabsorbed depreciation (Sec 32(2)) cannot be set off against winnings from lottery, gambling, betting, etc.
📌 Final Answer:
Under the Income Tax Act, 1961, no loss (current or brought forward) — including business loss — can be set off against income from lotteries or crossword puzzles, due to the special nature of Section 115BB and the explicit bar in Section 58(4).
Let’s give you a clear answer — with legal sections, case law, and interpretation.
✅ Short Answer:
No, business loss or any other loss cannot be set off or carried forward against income from lotteries, crossword puzzles, races (including horse races), card games, betting, gambling, etc.
⚖️ Legal Provision — Section 115BB & Section 58(4):
📘 Section 115BB – Tax on winnings from lotteries, etc.
Income from such winnings is taxed at a flat rate of 30% (plus cess and surcharge).
The section overrides all other provisions — i.e., it is a special charging section.
“Notwithstanding anything contained in any other provisions of this Act...”
📘 Section 58(4) — No Deduction Allowed
“No deduction shall be allowed in computing the income by way of winnings from lotteries, crossword puzzles...”
That means:
No expenditure, allowance, or loss (including brought forward losses) can be claimed against such income.
🧾 Also, Section 70 & 71 (Set-off of losses) do not override Section 115BB:
Section 70 allows intra-head set-off (e.g., business loss with other business income).
Section 71 allows inter-head set-off (e.g., business loss with income from other sources).
BUT:
❌ These are general provisions, and cannot override special provisions like Section 115BB.
📚 Judicial Precedents:
✅ Kerala High Court in Manjoo & Co. v. CIT (195 Taxman 39)
Held that:
“Income from lottery is taxable under section 115BB at a flat rate and cannot be reduced by any loss incurred under any other head of income, including business losses.”
✅ CIT v. K. Chinna Krishna Chetty (246 ITR 121 – Madras HC)
Held:
Income from lottery is taxable in full without allowing set-off of business loss.
Important Note:
Even brought forward business losses (Sec 72) or unabsorbed depreciation (Sec 32(2)) cannot be set off against winnings from lottery, gambling, betting, etc.
📌 Final Answer:
Under the Income Tax Act, 1961, no loss (current or brought forward) — including business loss — can be set off against income from lotteries or crossword puzzles, due to the special nature of Section 115BB and the explicit bar in Section 58(4).
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