Carried forward Business Loss - Belated Return AY 2025-26

[PRIYAM KHAMBHATA]

Respected Sir

My client is Partnership Firm and its Return of Income filed with Business Loss of Rs.70L after due date. Accordingly, Business loss is wipeout.

Now, such Partnership Firm would be taken over by Pvt. Limited Company in the month of October 2026. But Pvt Ltd Company is raised a query that Business Loss of Rs.70L is not to be allowed to set off against business income. Therefore, Pvt Limited Company is not interested to take over of my client Partnership Firm. In this situation, what action would be taken to get such business loss to be allowed against business income by Successor Pvt Ltd Co.

Please guide me

AI Summary

Belated business-loss returns require condonation before a successor company may claim loss carry-forward after firm succession.
Business loss declared in a return filed after the due date is ordinarily ineligible for carry-forward. Condonation of delay under section 119(2)(b) must first be sought by establishing genuine cause, the genuineness of the loss, supporting records, and absence of tax-avoidance motive. If condonation makes the loss eligible, firm-to-company succession must satisfy applicable loss-transfer conditions, including transfer of business assets and liabilities, prescribed partner shareholding, share-only consideration, and voting-power continuity.