Income Tax Act, 1961
Section 6: Subs. by s. 16, ibid., for certain words (w.e.f. 11987).
6. Subs. by s. 16, ibid., for certain words (w.e.f. 11987).
7. Subs. by s. 16, ibid., for “from the source specified in clause (c) of sub-section (2)” (w.e.f. 11987).
8. Subs. by Act 18 of 1992, s. 39, for sections 75, 76 and 77 (w.e.f. 11993). Earlier amended by Act 20 of 1974, s. 13
(w.e.f 11975), Act 11 of 1987, s. 74 (w.e.f. 11988), omitted by Act 4 of 1988, s. 19 (w.e.f. 11989) and restored
by Act 3 of 1989, s. 95 (w.e.f. 11989).
326
78. Carry forward and set off of losses in case of change in constitution of firm or on
succession.—1[(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.
2[79. Carry forward and set off of losses in case of certain companies.—Notwithstanding anything
contained in this Chapter, where a change in shareholding has taken place in a previous year,—
(a) in the case of a company not being a company in which the public are substantially interested
and other than a company referred to in clause (b), no loss incurred in any year prior to the previous
year shall be carried forward and set off against the income of the previous year, unless on the last
day of the previous year, the shares of the company carrying not less than fifty-one per cent. of the
voting power were beneficially held by persons who beneficially held shares of the company carrying
not less than fifty-one per cent. of the voting power on the last day of the year or years in which the
loss was incurred;
(b) in the case of a company, not being a company in which the public are substantially interested
but being an eligible start-up as referred to in section 80-IAC, the loss incurred in any year prior to
the previous year shall be carried forward and set off against the income of the previous year, if, all
the shareholders of such company who held shares carrying voting power on the last day of the year
or years in which the loss was incurred,—
(i) continue to hold those shares on the last day of such previous year; and
(ii) such loss has been incurred during the period of seven years beginning from the year in
which such company is incorporated:
Provided that nothing contained in this section shall apply to a case where a change in the
said voting power and shareholding takes place in a previous year consequent upon the death of a
shareholder or on account of transfer of shares by way of gift to any relative of the shareholder
making such gift:
Provided further that nothing contained in this section shall apply to any change in the
shareholding of an Indian company which is a subsidiary of a foreign company as a result of
amalgamation or demerger of a foreign company subject to the condition that fifty-one per cent.
shareholders of the amalgamating or demerged foreign company continue to be the shareholders
of the amalgamated or the resulting foreign company.]
3[Provided also that nothing contained in this section shall apply to a company where a
change in the shareholding takes place in a previous year pursuant to a resolution plan approved
under the Insolvency and Bankruptcy Code, 2016, after affording a reasonable opportunity of
being heard to the jurisdictional Principal Commissioner or Commissioner.]
80. Submission of return for losses.—Notwithstanding anything contained in this Chapter, no loss
which has not been determined in pursuance of a return filed 4[in accordance with the provisions of
sub-section (3) of section 139], shall be carried forward and set off under sub-section (1) of section 72 or
sub-section (2) of section 73 5[or sub-section (2) of section 73A] or 6[sub-section (1) or sub-section (3) of
section 74] 7[or sub-section (3) of section 74A].
1. Subs. by Act 18 of 1992, s. 40, for sub-section (1) (w.e.f. 11993). Earlier subs. by Act 4 of 1988, s. 20
(w.e.f. 11989) and restored by Act 3 of 1989, s. 95 (11989).
of sub-section
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.]
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.
2[79. Carry forward and set off of losses in case of certain companies.—Notwithstanding anything
contained in this Chapter, where a change in shareholding has taken place in a previous year,—
in the case of a company not being a company in which the public are substantially interested
and other than a company referred to in clause
in the case of a company, not being a company in which the public are substantially interested
but being an eligible start-up as referred to in section 80-IAC, the loss incurred in any year prior to
the previous year shall be carried forward and set off against the income of the previous year, if, all
the shareholders of such company who held shares carrying voting power on the last day of the year
or years in which the loss was incurred,—
continue to hold those shares on the last day of such previous year; and
such loss has been incurred during the period of seven years beginning from the year in
which such company is incorporated:
Provided that nothing contained in this section shall apply to a case where a change in the
said voting power and shareholding takes place in a previous year consequent upon the death of a
shareholder or on account of transfer of shares by way of gift to any relative of the shareholder
making such gift:
Provided further that nothing contained in this section shall apply to any change in the
shareholding of an Indian company which is a subsidiary of a foreign company as a result of
amalgamation or demerger of a foreign company subject to the condition that fifty-one per cent.
shareholders of the amalgamating or demerged foreign company continue to be the shareholders
of the amalgamated or the resulting foreign company.]
3[Provided also that nothing contained in this section shall apply to a company where a
change in the shareholding takes place in a previous year pursuant to a resolution plan approved
under the Insolvency and Bankruptcy Code, 2016, after affording a reasonable opportunity of
being heard to the jurisdictional Principal Commissioner or Commissioner.]
80. Submission of return for losses.—Notwithstanding anything contained in this Chapter, no loss
which has not been determined in pursuance of a return filed 4[in accordance with the provisions of
sub-section
of section 139], shall be carried forward and set off under sub-section
of section 72 or
sub-section
of section 73 5[or sub-section
of section 73A] or 6[sub-section
or sub-section
of
section 74] 7[or sub-section
of section 74A].
1. Subs. by Act 18 of 1992, s. 40, for sub-section
(w.e.f. 11993). Earlier subs. by Act 4 of 1988, s. 20
(w.e.f. 11989) and restored by Act 3 of 1989, s. 95