Section 79 ITA 1961 restricts CARRY FORWARD of LOSSES of a COMPANY in …

Question

Section 79 ITA 1961 restricts CARRY FORWARD of LOSSES of a COMPANY in case of CHANGE in BENEFICIAL OWNERSHIP:

Accepted Answer

A. CHANGE IN BENEFICIAL OWNERSHIP exceeding 49% in CLOSELY HELD company DISALLOWS carry-forward of losses; subject to exceptions (death, gifts, demerger, eligible start-up)

1. Section 79 Income Tax Act 1961: restriction on CARRY FORWARD of LOSSES in case of CHANGE in beneficial ownership.
2. APPLIES TO: CLOSELY HELD COMPANIES (companies in which public are NOT substantially interested).
3. RULE: if the BENEFICIAL OWNERSHIP of shares carrying NOT LESS THAN 51% of voting rights has CHANGED hands compared to the LAST DAY of YEAR in which loss arose, the LOSS SHALL NOT BE CARRIED FORWARD.
4. EXCEPTIONS:
5. (i) Change due to DEATH of shareholder;
6. (ii) Transfer by way of GIFT to relative;
7. (iii) Change pursuant to DEMERGER or AMALGAMATION;
8. (iv) ELIGIBLE START-UPs (Section 79(2A));
9. (v) Cases where company has become EXIT or strategic disinvestment.
10. The provision prevents 'TRAFFICKING IN LOSSES'.
11. Hence option B is correct.
_Source: CS Executive Paper 4 Tax Laws (ICSI BoS) + Income Tax Act 1961 + CGST Act 2017 — Income Tax Act 1961, Section 79_

Answer

no restriction (cf. Income Tax Act 1961, Section 79) (cf. Income Tax Act 1961, Section 79) (cf. Income Tax Act 1961, Section 79)

Answer

any change allowed (cf. Income Tax Act 1961, Section 79) (cf. Income Tax Act 1961, Section 79) (cf. Income Tax Act 1961, Section 79)

Answer

no carry forward at all (cf. Income Tax Act 1961, Section 79) (cf. Income Tax Act 1961, Section 79) (cf. Income Tax Act 1961, Section 79)