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What happens to this kind of loss.
suppose in case a partner dies in a firm and that firm incurred loss. Can the whole loss be carried forward or only that portion excluding the share of the deceased partner?
Replies (4)
as the parter and firm both are different identity for incometax purpose, whole of the loss is to be accounted.
But sec 78 says other way round
Deceased partners share in brought forward losses minus deceased partners share in current year profit = Amount of brought forward loss that cannot be carried forward
Yes your interpretation of S 78 is appropriate. the share of loss attributable to the deceased partner cannot be claimed by the firm. His share of loss will lapse, no one can claim it.
This is applicable to all kinds of losses incurred by the firm.
But it does not cover (As per decision in Concorde Industries, i think)
unabsorbed depreciation u/s 32(2) and
Sci-research capital exp unabsorbed and c/f as per section 35(4)
Also this problem can be overcome if one of the legal heirs is admitted in place of the deceased partner with his share. Partnership should not be dissolved and business should be continued.
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