Case law - loss set off

[Sarwan Agarwal]

Dear Sir, my qurrey is on Section 79 of the Income Tax Act, 1961. A Pvt. Ltd. company having three share holders say X holding 500 shares, Y holding 1000 Shares and Z holding 1500 shares on the last day of previous year on which loss was incurred. In the year of set off the same X, Y and Z held the shares but now x holds 5000 shares (increase by issue of addittioal 4500 shares)the othe holding the same nos. Now the Question is whether loss is permitted to be set off. Plz site some case law if possioble. Regds

[Surender Gupta]

As per the provisions of section 79, you are qualifying the conditions and accordingly entitled to carry forward the loss.

AI Summary

Section 79 Allows Loss Set-Off for Private Company Despite Shareholder Change, Conditions Met for Carry Forward A query was raised regarding the applicability of Section 79 of the Income Tax Act, 1961, concerning the set-off of losses for a private limited company with three shareholders. The shareholder structure changed with one shareholder, X, increasing their shareholding significantly. The question was whether the company could still set off the loss. The response indicated that the conditions under Section 79 were met, allowing the company to carry forward the loss.