Carry forward of losses limited when a partner retires or dies, reducing the firm's entitlement to prior partners' loss shares. Section 78 limits carry forward of brought forward business losses when a partner retires or dies: the firm cannot carry forward the retired/deceased partner's share in brought forward losses less that partner's share of current year profit. The restriction excludes cases of admission of a new partner or only a change in profit sharing, and does not apply to unabsorbed depreciation. Under succession other than by inheritance, only the person who incurred the loss may carry it forward; the restriction applies to losses but not to unabsorbed depreciation, unabsorbed capital expenditure on scientific research, or family planning expenditure.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Carry forward of losses limited when a partner retires or dies, reducing the firm's entitlement to prior partners' loss shares.
Section 78 limits carry forward of brought forward business losses when a partner retires or dies: the firm cannot carry forward the retired/deceased partner's share in brought forward losses less that partner's share of current year profit. The restriction excludes cases of admission of a new partner or only a change in profit sharing, and does not apply to unabsorbed depreciation. Under succession other than by inheritance, only the person who incurred the loss may carry it forward; the restriction applies to losses but not to unabsorbed depreciation, unabsorbed capital expenditure on scientific research, or family planning expenditure.
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