Set Off and Carry Forward of Losses in case of conversion of Private Company or Unlisted Public Company into Limited Liability Partnership Firm
Set Off and Carry Forward in case of Conversion Section 72A
If any private company or unlisted public company has been' converted into a Limited Liability Partnership Firm, unadjusted losses under the head business/profession and unabsorbed depreciation shall be considered to be that of LLP as if incurred in the year of the conversion provided the shareholders of the company have at least 50% shares in the profit of LLP for a period of at least 5 years from the date of conversion and also the value of the assets as appearing in the books of accounts of the company was not exceedingRs.5crores in any of the 3 years preceding the year of conversion.
1. Set off and 'carry forward is mandatory, not voluntary: e.g.-Mr. X has loss under the head house property 250,000 and income under the head business/profession 250,000 during the assessment year 2018-19, in this case, loss of house property has to be set off from business income of the assessment year 2018-19 and Mr. X is not allowed to carry 'forward the loss of house property.
2. Any loss has to be set off first within the same head and only after that under some other heads.
3. Loss of current year shall be set off first and only after that brought forward losses can be adjusted.
Question: "Loss can be carried forward only by the person, who has incurred the loss". — Discuss.
Answer: Loss can be carried forward only by the person who has incurred the loss, however, there are exceptions as given below:
(i) The amalgamation of a company Section 72A-
(ii) Demerger of a company Section 72A'
(iii) Conversion of sole proprietary concern into, company "Section 72A (iv)Conversion of the firm into company Section 72A
(v) Conversion of a private company or unlisted public company into limited liability partnership firm Section 72A
(vi) Succession by inheritance Section 78
Where any person carrying on any business or profession has been succeeded in such capacity by another person by inheritance, such other person shall be allowed to carry .forward and set off against his income, any loss incurred by the predecessor. E.g. If Mr. X has a business and has incurred loss in his business and after his death, his business was inherited by his son, in this case son shall be allowed to carry forward and set off the loss.
Loss from Agriculture
Loss from Agriculture cannot be set off from incomes of other heads similarly, loss of other heads cannot be set off from Agriculture Income.
Loss from agriculture can be set off only from agricultural income and carry forward is allowed for 8 years and in subsequent years also it can be set off from agriculture income.
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