Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

What happens to this kind of loss.

Ashrith Kotian (student ) (188 Points)

11 March 2016

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?

Reply
Follow
Share

4 Replies

U S Sharma (glidor@gmail.com) (21056 Points)
Replied 11 March 2016

as the parter and firm both are different identity for incometax purpose, whole of the loss is to be accounted.

Ashrith Kotian (student ) (188 Points)
Replied 11 March 2016

But sec 78 says other way round

CA Raj Doshi (Practising CA) (8795 Points)
Replied 13 March 2016

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

Max Payne (employed) (2569 Points)
Replied 13 March 2016

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.