Setoff u/s 75 and retiring partners shares in unabsorbed dep
hdshardik
(Querist) 17 November 2013
This query is : Resolved
As per section 75.- Losses of firms.- Where the assessee is a firm, 2 partner the same share of the retiring partner and the private co is admitted by same share retiring partners and by same percentage a private lt continues in the said firm , as on date un absorbed depreciation is stood 5 Lacs , can unabsorbed c/f depreication is alllowable to set off against the profit available in the subsequest year ? is retiring partners shares unabsorbed depreciation require to separate and not allow for setoff against profit of the firm under sections 70, 71, 72, 73, 74 and 74A. ?
Vineet
(Expert) 10 December 2013
Your question is not very clear, let me refer to section and answer your query.
Section 75 is applicable in specific cases where profit and losses have been apportioned among partners prior to AY 1992-93, as per the law at relevant time. The section provides that in such cases, the apportioned loss shall be allowed to be set off in the hands of firm from FY 1993-94 onwards subject to the condition that partner continues in the same firm. So the section does not apply in your case.
Now it is understood that in your case existing partners have been replaced by Private Companies. In such case the c/f loss pertaining to share of retiring partner shall not be available in the firm for the purpose of set off as per section 78 of the Act.
However, there is no such condition in respect of unabsorbed deprection which is governed by provision of section 32. So entire unabsorbed depreciation will be available for the firm to be claimed in next year.
