Carry Forward of Losses is restricted for retiring partners and non-inheritance successors, while unabsorbed depreciation remains transferable.

Carry forward and set-off of a firm's losses is restricted on retirement or death of a partner to the extent attributable to that partner, while losses attributable to continuing partners may continue subject to the Act. The restriction does not apply on admission of a new partner or a mere change in profit-sharing ratio, and unabsorbed depreciation remains eligible for carry forward. Where a business or profession is succeeded otherwise than by inheritance, the successor cannot carry forward the predecessor's losses unless expressly permitted; specified unabsorbed expenditure is not subject to this loss restriction.

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