78(2)

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CA JAYESH RELKAR (Querist)
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11 October 2013 Case 1 : Mr. A incurred business loss... He died in the same year. he has only one son. His son (Mr.X) took over the business and start partnership (in father's business) with HIS FRIENDS. Now, can son (Mr.X) set off loss incurred by his father against partnership profit as per section 78(2)??

Case 2 : Suppose in above example father wrote in his will that his son cannot be given a single penny out of his property, then "will the son falls within the definition of legal heirs as contemplated in section 78(2)and set off the losses accordingly??

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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11 October 2013 i) No because predecessor and successor are two separate taxable entities viz., individual and partnership.

ii) Exception to section 78(2) can't be enjoyed by the son if there is a specific bar in the WILL of father.

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