26.04.

2024
Friday 9.15 p.m.
set off and carry forward

sum no.1

Late filing of loss returns - effect on losses

losses that cannot be carried forward to next AY

business loss
speculative business loss
specified business loss u.s.35AD
long term capital loss
short term capital loss

however, losses that can be carried forward

only two items
unabsorbed depreciation; and
loss from house property

sum no.5

point: Transfer of assets by OLD Ltd to NEW Ltd, does not amount to transfer
hence no capital gains for OLD Ltd

Computation of total income of NEW LTd for the AY 2024-25

Net profit (given) 140 lacs

Add: Depreciation 150 x 15% 22.5 lacs
162.5 lacs
Less: Depreciation 100 x 15% 15 lacs
147.5 lacs
Less: Losses of OLD Ltd will now be
treated as losses of NEW Ltd
Business loss 120 lacs fresh 8 year period is allowed
Capital expenditure on scientific research 2 lacs
Unabsorbed depreciation 18 lacs indefinite period of time
Speculative business loss not allowed
PGBP / Total Loss 7.5 lacs
 27.04.2024
Saturday 9.15 p.m.
set off and carry forward

sum no.6 Conditions of section 47(xiiib) are satisfied: how losses of pvt comp
hence, not a transfer will be treated as losses o

no capital gains if conditions of section 47

depreciation to be shared between the company and the firm
mat credit (if any) expires all assets and liab are tak
all shareholders now bec
losses of private company will now be treated as losses of LLP no direct or indirect bene

a) Total income of ALL TRADE LLP for AY 24-25 suppose

AY 24-25
Profit before losses (given) 600000
Less: Bfd loss of AY 16-17 200000
400000 one condition:
Less: Bfd loss of AY 23-24 400000 the profit sharing ratio of
Total Income of LLP 0 should not fall below 50%
5 years from the date of c
Balance loss of Rs.100000 to be carried forward by LLP to next AY 25-26
01.04.2023
31.03.2028
b) impact: if profit sharing ratio of existing partners
is reduced below 50% within 5 years: 26-27
Mr.KNR
the losses that were set off earlier will now be treated Mrs.KNR
as income and added back to total income of LLP Mr.G
how losses of pvt comp
will be treated as losses of LLP?

if conditions of section 47(xiiib) are satisfied

all assets and liab are taken over by LLP

all shareholders now become partners of LLP
no direct or indirect benefit received by shareholders

KNR 60%
Mrs.KNR 40%

one condition:
the profit sharing ratio of the existing partners
should not fall below 50% within a period of
5 years from the date of conversion

01.04.2023
31.03.2028

20%
20%
60%
Section 78: Losses of a partnership

in case of change in the constitution of the firm

total loss
i.e. due to retirement or death 1200000

A, B and C are partners in the ratio of 4:4:3

Bfd losses Rs.12 lacs

On 01.04.2023; Mr.C retired from the firm

what is the impact on losses due to retirement of C? note: SC: this restriction will no

sum no.9

share of partner C is 1/4th or 25% SECTION 78 restriction does not apply on unabsorbed

Statement showing losses to be carried forward by the firm

AY item Total loss share of Balance to

loss of C be cfd
22-23 unab biz loss 120000 30000 90000
23-24 unab biz loss 190000 47500 142500
23-24 unab deprn 120000 0 120000 supreme court decision
23-24 unab LTCL 300000 75000 225000

Total Income of the firm for AY 24-25

Income from house property 70000
PGBP 170000
Less: bfd biz loss AY 22-23 90000
80000
Less: bfd biz loss AY 23-24 80000 nil Balance Rs.62500 to be cfd by the firm

Short term capital gain 40000

Long term capital gain 210000
Less: Bfd LTCL 210000 nil Balance Rs.15000 to be cfd by the firm

Income from other sources 60000

170000
Less: Unabsorbed depreciation can be set off
against any head of income 120000
Total Income of the firm 50000
 share of C amt of loss to be cfd
360000 840000
to be
ignored
cannot
be cfd
by the
firm

note: SC: this restriction will not have any effect on

unabsorbed depreciation

on does not apply on unabsorbed deprn

court decision

s.62500 to be cfd by the firm

s.15000 to be cfd by the firm

Section 79: Losses of a closely held company

Bfd losses of AY 21-22; 22-23; 23-24 Rs.25 lacs AY 24-25

Mr.A 60% Mr.A sells all his shares to Mr.D
Mr.B 20% now
Mr.C 20% Mr.D 60%
Mr.E 20%
Mr.F 20%
Section 79:
change in the shareholding pattern of 100%
majority has gone out
change is more than 49%
therefore, losses cannot be carried forward
if there is more than 49% change
this will not affect unabsorbed depreciation - SC

sum no.7

up to 31.03.2022 Total Income of PY 22-23 AY 23-24

A, B, C & D - 25% each
Profit before depreciation
for 22-23 31.03.2023 (-) current year depreciation
A sold his shares to Y
change in the shareholding pattern: 25% (-) bfd business loss of AY 22-23
change is only 25%; majority is still there
(-) unabsorbed dep for all years
for 23-24
B also sold his shares to Z
change in the shareholding pattern: 50%
change is more than 49% Total Income of PY 23-24 - AY 24-25

Profit before depreciation

(-) current year depreciation

(-) bfd business loss

(-) unabsorbed deprn

Total Income
all his shares to Mr.D

2-23 AY 23-24

800000
100000
700000
600000 set off is allowed this year 25%
100000
100000 balance dep will be cfd
nil

3-24 - AY 24-25

1500000
150000
1350000
0
1350000
1200000 can be set off even if there
150000 is more than 49% change
restriction does not apply on
unabsorbed depreciation - SC