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Set off of losses of a closely held private limited co

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(Querist)
15 November 2012 Sir
One of clients aquired all the shares of a closely held pvt ltd company and the Co has a Business loss of Rs 10 lakhs and unubsorbed depreciation rs 3.5 lakhs.at the time of transfer. Whether the Company can carry forward and sett off both the losses after the transfer of shares. If posiible what are the conditions and restrictions .Kindly advice
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CA Roshan Jha

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CA Roshan Jha (Expert)
15 November 2012 As per section 79, a closely held company can not set off its past losses against current year's profit unless 51% or more shares are held by same persons, who held shares on the last day of year in which loss was incurred. Section 79 is applicable only to loss and not to unabsorbed depreciation. Hence the company can carry forward and set off unabsorbed deprecication but not the business loss.
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