Section 79 loss means business loss only; unabsorbed depreciation and development rebate are excluded, limiting carry-forward relief.

For Section 79, "loss" is confined to business loss and does not include unabsorbed depreciation or unabsorbed development rebate, so those items cannot be treated as prior losses for carry-forward purposes. The Court also applied earlier binding authority to reject the Revenue's broader construction that would require proving both a 51% transfer of voting power and an intent to reduce or avoid tax liability. On the exception-clause question, the same prior reasoning governed, and the condition was not established in the Revenue's favour. The High Court's view was sustained and the Revenue's challenge failed.

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Issues: (i) Whether, for the purpose of Section 79, the expression "loss" includes unabsorbed depreciation and unabsorbed development rebate; (ii) Whether the Department must prove both transfer of not less than 51% voting power and an intent to reduce or avoid tax liability for Section 79 to apply; (iii) Whether the condition in the exception clause to Section 79 was not fulfilled so that prior losses could not be carried forward and set off.

Issue (i): Whether, for the purpose of Section 79, the expression "loss" includes unabsorbed depreciation and unabsorbed development rebate.

Analysis: The statutory reference to "loss" in Section 79 was held to be confined to business loss. Unabsorbed depreciation and unabsorbed development rebate are distinct items and do not fall within that expression for the purpose of applying the section.

Conclusion: The expression "loss" in Section 79 does not include unabsorbed depreciation or unabsorbed development rebate, and the finding of the High Court was affirmed in favour of the assessee.

Issue (ii): Whether the Department must prove both transfer of not less than 51% voting power and an intent to reduce or avoid tax liability for Section 79 to apply.

Analysis: The question was covered by an earlier binding decision which had already construed Section 79 and approved the same view taken in the judgment under appeal. On that basis, the Department's broader construction was rejected.

Conclusion: The issue was decided against the Revenue and in favour of the assessee.

Issue (iii): Whether the condition in the exception clause to Section 79 was not fulfilled so that prior losses could not be carried forward and set off.

Analysis: This question was also concluded by the earlier decision relied upon by the Revenue itself, and the same reasoning governed the present case.

Conclusion: The issue was decided against the Revenue and in favour of the assessee.

Final Conclusion: The appeals failed and the High Court's view was sustained, resulting in dismissal of the Revenue's challenge.

Ratio Decidendi: For Section 79 purposes, "loss" refers to business loss alone and does not encompass unabsorbed depreciation or unabsorbed development rebate.

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