Section 74 of the Income Tax Act

Income-tax Act, 2025: s.111

Section 74 of the Income-tax Act, 1961 corresponds to section 111 (Carry forward and set off of loss from Capital gains) of the Income-tax Act, 2025.

Read section 111 of the 2025 Act

Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.

The decision most relied on for Section 74 is CIT v. Hariprasad & Company Pvt. Ltd. (99 ITR 118), cited in 78 of the 199 judgments on BharatTax that turn on this section.

Leading authorities on Section 74

CIT v. Hariprasad & Company Pvt. Ltd.
99 ITR 118 · 1975 · Supreme Court
78
citing judgments

The terms 'income' or 'profits and gains' are inclusive of losses, signifying that losses are 'minus income' to be factored into the computation of taxable income. Therefore, set-off and carry forward provisions for losses apply exclusively to taxable income or gains and cannot be pressed into service against non-taxable gains, such as those exempt under a DTAA or other specific provisions.

CIT v. Manmohan Das
59 ITR 699 · 1966 · Supreme Court
47
citing judgments

The eligibility for an assessee to carry forward and set off losses, including capital losses, against future income is determined by the Assessing Officer in the year the set-off is claimed, not in the year the loss was incurred.

DCIT v. Gloster Jute Mills Limited
88 Taxmann.com 738 · 2017 · ITAT
39
citing judgments

Additional depreciation under Section 32(1)(iia) can be claimed in the year an asset is acquired and installed, even if it is claimed in a subsequent year of acquisition and installation.

Goodyear (I) Ltd. v. ITO
73 ITD 189 · 2000 · ITAT
27
citing judgments

Expenditure incurred for the transfer of the use of licenses, without acquiring ownership rights or an enduring benefit, constitutes revenue expenditure. Such payments are allowable as a deduction if they are directly relatable to services in the revenue field.

Kishorebhai Bhikhabhai Virani v. ACIT
367 ITR 261 · 2014 · High Court
22
citing judgments

Capital gains arising from the transfer of equity shares and equity-oriented mutual funds are exempt if the shares are long-term capital assets, transferred on the stock exchange, and the sale transaction is subject to levy. The case also relates to the application of beneficial provisions and the rejection of claims under Double Taxation Avoidance Agreements (DTAA).

CIT v. Gujarat Carbon Ltd.
254 ITR 294 · 2002 · High Court
19
citing judgments

Payments made under an agreement that are directly related to services in the revenue field are allowable as revenue expenditure, not capital expenditure.

ACIT v. J.P. Morgan India Investment Company Mauritius Limited
143 Taxmann.com 82 · 2022 · ITAT
18
citing judgments

Where an assessee claims treaty benefits under Article 13(4) of the India-Mauritius DTAA, exempting capital gains from Indian taxation, brought forward short-term and long-term capital losses cannot be set off against such exempt gains, nor can they be carried forward to subsequent years.

Royal Calcutta Turf Club v. CIT
144 ITR 709 · 1983 · High Court
15
citing judgments

Capital loss arising from the sale of shares can be carried forward to subsequent years. The accounting treatment of shares as a capital asset in the books of account confirms that their sale generates capital profit or loss.

Jonas Wood Head and Sons. v. CIT
117 ITR 55 · 1979 · High Court
14
citing judgments

Whether expenditure is capital or revenue in nature depends on the specific terms of the agreement, and royalty payments for the use of trademarks and know-how are not necessarily capital expenditure if they are not of an enduring nature.

CIT v. Western India Oil Distributing Co. Ltd.
249 ITR 517 · 2001 · Supreme Court
13
citing judgments

Where an assessee claims exemption for capital gains under a DTAA, capital losses are also exempt and can be segregated from capital gains for the purpose of claiming benefits under the DTAA or the Act, whichever is more beneficial. Assessees are justified in carrying forward brought forward losses when claiming DTAA exemptions on capital gains.

Judgments on Section 74

Vidyasagar M.P Sah, Mumbai vs. DCIT 23(3), Mumbai

In the result, this appeal by the assessee stands dismissed

ITA 527/MUM/2016[2012-13]Status: DisposedITAT Mumbai04 Dec 2017AY 2012-13

Bench: Shri Shamim Yahya, Am & Shri Ram Lal Negi, Jm आयकर अपील सं./I.T.A. No. 527/Mum/2016 ("नधा"रण वष" / Assessment Year: 2012-13) Vidyasagar M. P. Sah Dy. Cit-23(3), बनाम/ 22-A, Bandstand Society, Matru Mandir, Tardeo Road, 197-C, Kane Road, Bandra (W), Mumbai Vs. Mumbai-400 050 "थायी लेखा सं./जीआइआर सं./Pan/Gir No. Aafps 5412 H (अपीलाथ" /Appellant) (""यथ" / Respondent) : अपीलाथ" क" ओर से / Appellant By : Shri Ajay R. Singh ""यथ" क" ओर से/Respondent By : Ms. Aarjoo Garodia सुनवाई क" तार"ख / : 04.12.2017 Date Of Hearing घोषणा क" तार"ख / : 04.12.2017 Date Of Pronouncement आदेश / O R D E R Per Shamim Yahya, A. M.: This Appeal By The Assessee Directed Against The Order By The Commissioner Of Income Tax (Appeals)-34, Mumbai (‘Cit(A)’ For Short) Dated 12.01.2016 & Pertains To The Assessment Year (A.Y.) 2012-13. The Grounds Of Appeal Read As Under: 1. Short Term Capital Gain Of Rs.3,51,66,426/- Treated As Business Income 1. The Learned Cit(A) Erred In Treating The Short Term Capital Gain Of Rs.3,51,66,426/- As 'Business Income1 Without Appreciating The Crucial Facts That The Assessee Is A Professional / Consultant For Exploration & Drilling Activities For Oil Wells / Rigs Etc. Which Is The Principal Source Of Income Since 32 Years, Wherein He Has To Devote Maximum Time & The Activity Has Been Accepted By The Department In All The Prior Years As Well As In The Relevant

For Appellant: Shri Ajay R. SinghFor Respondent: Ms. Aarjoo Garodia

Aditya Birla Minacs Worldwide Ltd, Mumbai vs. DCIT 8(3), Mumbai

The appeals of the assessee are partly allowed

ITA 4602/MUM/2014[2005-06]Status: DisposedITAT Mumbai16 Feb 2017AY 2005-06

Bench: S/Shri Rajendra & Ram Lal Negiआयकर आयकर अपील अपील संसंसंसं./I.T.A./4602 & 4603/Mum/2014, िनधा"रण िनधा"रण वष" वष" /Assessment Year: 2005-06&2006-07 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" M/S.Aditya Birla Minacs Worldwide Ltd. Dcit, -8(1) (Formerly Known As Transworks Information Services Ltd.) Aayakar Bhavan. M.K. Road (Now Known As Minacs Ltd.) Mumbai-400 020. Symphony It Park, 8Th, 9Th & 10Th Floor Vs. Chandivali Farm Road, Chandivali Andheri East, Mumbai-400 072 Pan:Aaact 1567 A (अपीलाथ" /Appellant) (""यथ" / Respondent) आयकर वष" /Assessment Year: 2005-06&2006-07 आयकर अपील अपील संसंसंसं./I.T.A./4469 & 4470/Mum/2014, िनधा"रण िनधा"रण वष" आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" Dcit, -8(1)Aayakar Bhavan. Vs. M/S.Aditya Birla Minacs Worldwide Ltd. M.K. Roadmumbai-400 020. Mumbai-400 072. (अपीलाथ" /Appellant) (""यथ" / Respondent) Revenue By: Shri Rajesh Kumar Yadav-Dr Assessee By: Shri Ronak Doshi-Ar सुनवाई क" तारीख / Date Of Hearing: 16.02.2017 घोषणा क" तारीख / Date Of Pronouncement: 16.02.2017 आयकर आयकर आयकर अिधिनयम आयकर अिधिनयम अिधिनयम,1961 क" अिधिनयम क" क" धारा क" धारा धारा 254(1)केकेकेके अ"तग"त धारा अ"तग"त अ"तग"त आदेश अ"तग"त आदेश आदेश आदेश Order U/S.254(1)Of The Income-Tax Act,1961(Act) लेखा सद"य लेखा सद"य राजे"" राजे"" केकेकेके अनुसार अनुसार Per Rajendra, Am- लेखा लेखा सद"य सद"य राजे"" राजे"" अनुसार अनुसार Challenging The Orders Dated 18/03/2014 Of The Cit (A)-16 Mumbai,The Assessing Officer (Ao)And The Assessee Have Filed Cross Appeals For The Above-Mentioned Assessment Years (Ay.S.).Assessee-Company Is Engaged In The Business Of Information Technology Enabled Services.As The Issues Involved In Both The Years Are Common,So,A Single Order Is Being Passed.

For Appellant: Shri Ronak Doshi-ARFor Respondent: Shri Rajesh Kumar Yadav-DR
Section 10Section 10ASection 254(1)Section 72Section 80ASection 80B(5)

DCIT 8(1), Mumbai vs. Aditya Birla Minacs Worldwide P.Ltd, Mumbai

The appeals of the assessee are partly allowed

ITA 4469/MUM/2014[2005-06]Status: DisposedITAT Mumbai16 Feb 2017AY 2005-06

Bench: S/Shri Rajendra & Ram Lal Negiआयकर आयकर अपील अपील संसंसंसं./I.T.A./4602 & 4603/Mum/2014, िनधा"रण िनधा"रण वष" वष" /Assessment Year: 2005-06&2006-07 आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" M/S.Aditya Birla Minacs Worldwide Ltd. Dcit, -8(1) (Formerly Known As Transworks Information Services Ltd.) Aayakar Bhavan. M.K. Road (Now Known As Minacs Ltd.) Mumbai-400 020. Symphony It Park, 8Th, 9Th & 10Th Floor Vs. Chandivali Farm Road, Chandivali Andheri East, Mumbai-400 072 Pan:Aaact 1567 A (अपीलाथ" /Appellant) (""यथ" / Respondent) आयकर वष" /Assessment Year: 2005-06&2006-07 आयकर अपील अपील संसंसंसं./I.T.A./4469 & 4470/Mum/2014, िनधा"रण िनधा"रण वष" आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" Dcit, -8(1)Aayakar Bhavan. Vs. M/S.Aditya Birla Minacs Worldwide Ltd. M.K. Roadmumbai-400 020. Mumbai-400 072. (अपीलाथ" /Appellant) (""यथ" / Respondent) Revenue By: Shri Rajesh Kumar Yadav-Dr Assessee By: Shri Ronak Doshi-Ar सुनवाई क" तारीख / Date Of Hearing: 16.02.2017 घोषणा क" तारीख / Date Of Pronouncement: 16.02.2017 आयकर आयकर आयकर अिधिनयम आयकर अिधिनयम अिधिनयम,1961 क" अिधिनयम क" क" धारा क" धारा धारा 254(1)केकेकेके अ"तग"त धारा अ"तग"त अ"तग"त आदेश अ"तग"त आदेश आदेश आदेश Order U/S.254(1)Of The Income-Tax Act,1961(Act) लेखा सद"य लेखा सद"य राजे"" राजे"" केकेकेके अनुसार अनुसार Per Rajendra, Am- लेखा लेखा सद"य सद"य राजे"" राजे"" अनुसार अनुसार Challenging The Orders Dated 18/03/2014 Of The Cit (A)-16 Mumbai,The Assessing Officer (Ao)And The Assessee Have Filed Cross Appeals For The Above-Mentioned Assessment Years (Ay.S.).Assessee-Company Is Engaged In The Business Of Information Technology Enabled Services.As The Issues Involved In Both The Years Are Common,So,A Single Order Is Being Passed.

For Appellant: Shri Ronak Doshi-ARFor Respondent: Shri Rajesh Kumar Yadav-DR
Section 10Section 10ASection 254(1)Section 72Section 80ASection 80B(5)