Loss carry-forward after a partner's exit is capped by that partner's profit share in the relevant tax year.

Section 119 restricts a firm's carry-forward and set-off of losses following the retirement or death of a partner. Loss proportionately attributable to the outgoing partner is disallowed to the extent it exceeds that partner's profit share for the tax year; where there is no such profit share, the corresponding loss cannot be carried forward. It also bars a non-inheritance successor from setting off the predecessor's business or professional losses against the successor's income.

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