Loss availment in case of take over

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A private limited company cannot generally claim the carry-forwarded losses of an LLP it takes over. This is because tax rules, specifically Section 79, typically prevent loss utilisation if there isn't a 51% continuity in shareholders. While LLP mergers might allow loss carry-forward for the LLP itself, direct acquisition by a company usually prohibits this.

SHYAM KRISHNAN K

SHYAM KRISHNAN K (Querist)

09 June 2023 A private limited company had decided to take over an llp which have huge amount of carry forwarded losses. In this case, is the private limited company can avail the loss of llp

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

10 June 2023 No, it's not allowed.
You may Refer Section 79. According to the Section if 51% of the shareholders are not the same, carry forward of losses will not be allowed.

SHYAM KRISHNAN K

SHYAM KRISHNAN K (Querist)

10 June 2023 Is this case the private limited have 51% stake in LLP

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

10 June 2023 LLP merger with company is not allowed. In case of merger only carry forward of loss of LLP allowed.

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