Section 75 of Income Tax Act "Losses of firms"
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.
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.