carry forward of losses

Hi

Section 79 was introduced as an anti-abuse provision to curb taxpayers’ attempt at transferring losses incurred by a corporate entity by means of transfer of shareholding. This section restricts carry forward and set off of losses in the hands of a private company, if the shares of such company carrying at least 51% of voting power are not beneficially held by persons who beneficially held such shares on the last day of the previous year in which the loss was incurred.

This means that in case of 100% subsidiary, carry forward of losses is allowed to the holding company if the voting power is not reduced below 51%.

Losss of Subsidiary Comany Cannot be carried forwarded by holding company. loss shall be carried forwarded by an assessee who have incurred not by other assessee. there are some execption to it but not the case that is in question. 

Section 79 applies to  the company in which public are not substantially interested (closely held company), it states that losses shall be carried forwarded by comany (Who have incurred the loss, not other company), if on the last day of previous year, Share of company carrying  more than 51% of voting power were beneficial held by persons who beneficially held Share of the company carrying more than 51% of the voting power on the last day of year or years in which the loss was incurred.