Losses in speculation business
Section 73 of the Income-tax Act, 1961 deals with losses in speculation business. 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. The Act came into force on 01 Apr 1962. Repealed by the Income-tax Act, 2025 with effect from 1 April 2026, but conduct before that date is still charged, tried and appealed under it.
(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 trading in shares or 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.
Carry forward and set off of losses by specified business.
Section 73, The Income-tax Act, 1961 (Act 43 of 1961).
Now in the Income-tax Act
INCOME-TAX-ACT-2025 113 Set off and carry forward of losses computed in respect of speculation business Official correspondence
Measured by comparing the text of the two provisions, not taken from an official correspondence table — there is no machine-readable one. See both texts side by side before relying on it.
Both regimes are live. The repealed enactment still governs what happened while it was in force. We never redirect one to the other.
Cross-references
Extracted from the operative text of the enactments themselves. Every destination below exists in our corpus.
This section refers to
Referred to by 13
- Finance Act s. 20 Amendment of section 73
- Finance Act s. 28 Insertion of new section 73A
- Finance Act s. 26 Amendment of section 73
- s. 32 Depreciation
- s. 44C Deduction of head office expenditure in the case of non-residents
- s. 75 Losses of firms
- s. 80 Submission of return for losses
- s. 115J Special provisions relating to certain companies
- s. 115JA Deemed income relating to certain companies
- s. 115JB Special provision for payment of tax by certain companies
- s. 139 Return of income
- s. 155 Other amendments
and 1 more
Related judgements & precedents
These are some judgments that construed this section, and hold precedence value. They hold authority on how to read, interpret and use this section.
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Souvenir Developers (I) Pvt. Ltd. v. Union of India (Through ACIT)
Court's Decision & Legal Precedent
Eligible exchange-traded derivatives under s.43(5) proviso (d) (post 01.04.2006) are excluded from "speculative transaction"; Explanation to s.73 (share-trading deeming) does not recharacterise such derivative losses as speculation. DATE VERIFIED Final Order/Judgment 06.05.2022 (order-2.pdf).
On this section: Teaches limits of the s.73 Explanation deeming fiction vis-à-vis derivative trades carved out by s.43(5)(d).
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CIT v. Darshan Securities Pvt. Ltd.
Court's Decision & Legal Precedent
For the Explanation to s.73 first-limb exception, gross total income is computed under normal Act provisions (including business P&L with share-trading loss set off against other business income under the same head) before testing whether GTI "consists mainly" of the four non-business heads; Revenue cannot apply s.73(1) first to decide if the Explanation exception applies. DATE VERIFIED Oral Judgment/Final Order 02.02.2012 (order-2.pdf).
On this section: Teaches computation of gross total income for the first-limb exception in the Explanation to s.73.
The holding above is the ratio decidendi as extracted from the judgment by eCourts India, reproduced unaltered — it is a rendering of the court's reasoning, not a substitute for its words. Read the order itself before relying on it.
Questions about Section 73
What have the courts held on Section 73 of the Income-tax Act?
Souvenir Developers (I) Pvt. Ltd. v. Union of India (Through ACIT) (06 May 2022) is the leading judgment on this section among those set out below: Teaches limits of the s.73 Explanation deeming fiction vis-à-vis derivative trades carved out by s.43(5)(d). Another 1 judgment on this section is set out below. They run from 2012 to 2022.
How do I find court cases under Section 73 of the Income-tax Act?
In judgments and charge sheets this section is written several ways, and each form finds a different set of orders. These search the full text of every order eCourtsIndia holds, best matches first: Income Tax Act 73, section 73 Income Tax Act, section 73 of the Income-tax Act. Each opens the full list of orders on eCourtsIndia, where it can be narrowed by court, year and outcome. 2 reported judgments on this section are set out on this page, beginning with Souvenir Developers (I) Pvt. Ltd. v. Union of India (Through ACIT) (06 May 2022).
What should I read with Section 73 of the Income-tax Act, and has it changed?
Its own text turns on section 72 (Carry forward and set off of business losses), so none of them can safely be read on its own. 13 other provisions in this corpus refer back to it. For anything done on or after 1 April 2026 the provision to read is Income-tax Act, 2025, section 113 (Set off and carry forward of losses computed in respect of speculation business), which replaced it; conduct before that date is still charged, tried and appealed under this section.
When did Section 73 of the Income-tax Act come into force?
Section 73 of the Income-tax Act, cited as Income Tax Act 73, came into force on 01 Apr 1962, having been enacted on 13 Sep 1961. It is no longer in force.
Other sections of this Act
- 10. Incomes not included in total income30885 words
- 2. Definitions11419 words
- 80HHF. Deduction in respect of profits and gains from export or transfer of film software, etc7148 words
- 80-IB. Deduction in respect of profits and gains from certain industrial undertakings other than infrastructure development undertakings5474 words
- 155. Other amendments5451 words
- 139. Return of income5400 words
Source and method. Compiled from the enactments of Parliament and of the State legislatures as published on India Code, and republished together with commentary and other original matter under section 52(1)(q)(ii) of the Copyright Act, 1957. Structured, cross-referenced and maintained by eCourtsIndia. Recovered from the consolidated text published by the Income Tax Department, as amended by the Finance Act, 2026. India Code holds no record of this Act in any form. This page is not a substitute for legal advice.