Section 79 of Income Tax Act "Carry forward and set off of losses in the case of certain companies"
79. (1) Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place during the previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year, unless on the last day of the previous year, the shares of the company carrying not less than fifty-one per cent of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent of the voting power on the last day of the year or years in which the loss was incurred:
Provided that even if the said condition is not satisfied
in case of an eligible start-up as referred to in section
80-IAC, the loss incurred in any year prior to the previous
year shall be allowed to be carried forward and set off
against the income of the previous year if all the
shareholders of such company who held shares carrying voting
power on the last day of the year or years in which the loss
was incurred, continue to hold those shares on the last day
of such previous year and such loss has been incurred during
the period of seven years beginning from the year in which
such company is incorporated.
(2) Nothing contained in sub-section (1) shall apply,-
(a) to a case where a change in the said voting power and
shareholding takes place in a previous year consequent upon
the death of a shareholder or on account of transfer of
shares by way of gift to any relative of the shareholder
making such gift;
(b) to any change in the shareholding of an Indian company
which is a subsidiary of a foreign company as a result of
amalgamation or demerger of a foreign company subject to the
condition that fifty-one per cent shareholders of
amalgamating or demerged foreign company continue to be the
shareholders of the amalgamated or the resulting foreign
company;
(c) to a company where a change in the shareholding takes
place in a previous year pursuant to a resolution plan
approved under the Insolvency and Bankruptcy Code, 2016 (31
of 2016), after affording a reasonable opportunity of being
heard to the jurisdictional Principal Commissioner or
Commissioner;
(d) to a company, and its subsidiary and the subsidiary of
such subsidiary, where,-
(i) the Tribunal, on an application moved by the Central
Government under section 241 of the Companies Act, 2013 (18
of 2013), has suspended the Board of Directors of such
company and has appointed new directors nominated by the
Central Government, under section 242 of the said Act; and
(ii) a change in shareholding of such company, and its
subsidiary and the subsidiary of such subsidiary, has taken
place in a previous year pursuant to a resolution plan
approved by the Tribunal under section 242 of the Companies
Act, 2013 (18 of 2013) after affording a reasonable
opportunity of being heard to the jurisdictional Principal
Commissioner or Commissioner.
Explanation.-For the purposes of this section,-
(i) a company shall be a subsidiary of another company, if
such other company holds more than half in nominal value of
the equity share capital of the company;
(ii) "Tribunal" shall have the meaning assigned to it in
clause (90) of section 2 of the Companies Act, 2013 (18 of
2013).]
80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (2) of section 73A or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A.