Carry forward and set off of losses in the case of certain companies - Section 79 - Income Tax - Ready Reckoner - Income Tax

Carry forward and set off of losses in the case of certain companies - Section 79 Where a change in shareholding has taken place during the previous year in the case of a closely held company (not being a company in which the public are substantially interested), 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 51% of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than 51% of the voting power on the last day of the year or years in which the loss was incurred: Provisions for Eligible start up company - Even if the said condition is not satisfied in case of an eligible start up as referred to in section 80-IAC , the loss incurred in any year prior to the previous year shall be allowed to 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 10 years [Amended by FA, 2023 ] beginning from the year in which such company is incorporated. Exceptions :- Nothing in this section shall be applicable for following issues: 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 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 amalgamating or demerged foreign company continue to be the shareholders of the amalgamated or the resulting foreign company 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 To a company, and its subsidiary and the subsidiary of such subsidiary, where, i) the Tribunal, on an application moved by the Central Government under section 241 of the Companies Act, 2013 , has suspended the Board of Directors of such company and has appointed new directors nominated by the Central Government, under section 242 of the said Act; ii) and a change in shareholding of such company, and its subsidiary and the subsidiary of such subsidiary, has taken place in a previous year pursuant to a resolution plan approved by the Tribunal under section 242 of the Companies Act, 2013 after affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or Commissioner. To a company to the extent that a change in the shareholding has taken place during the PY due to relocation referred to in Section 47(viiac)/(viiad) . To an erstwhile public sector company subject to the condition that the ultimate holding company of such company, immediately after the completion of strategic disinvestment, continues to hold, directly or through its subsidiary or subsidiaries, at least 51% of the voting power of such company in aggregate. [Amended by FA 2022 ] If the above condition is not complied with in any PY after the completion of strategic disinvestment, the provisions of section 79 shall apply for such PY and subsequent PY's. [Amended by FA 2022 ].