What is Losses of firms? How to Carry forward and set off of losses in case of change in constitution of firm or on succession? Section 75 and 78 of Income Tax Act 1961

Losses of firms Carry forward and set off of losses in case of change in constitution of firm or on succession are defined under section 75 and 78 of Income Tax Act 1961. Provisions under these Sections are:

Section 75 of Income Tax Act "Losses of firms"

Section 75. Where the assessee is a firm, any loss in relation to the assessment year commencing on or before the 1st day of April, 1992, which could not be set off against any other income of the firm and which had been apportioned to a partner of the firm but could not be set off by such partner prior to the assessment year commencing on the 1st day of April, 1993, then, such loss shall be allowed to be set off against the income of the firm subject to the condition that the partner continues in the said firm and to be carried forward for set off under sections 70, 71, 72, 73, 74 and 74A.

 

Section 78 of Income Tax Act "Carry forward and set off of losses in case of change in constitution of firm or on succession"

Section 78. (1) Where a change has occurred in the constitution of a firm, nothing in this Chapter shall entitle the firm to have carried forward and set off so much of the loss proportionate to the share of a retired or deceased partner as exceeds his share of profits, if any, in the firm in respect of the previous year.

(2) Where any person carrying on any business or profession has been succeeded in such capacity by another person otherwise than by inheritance, nothing in this Chapter shall entitle any person other than the person incurring the loss to have it carried forward and set off against his income.

Home     About Us     Privacy Policy     Disclaimer     Sitemap