When is Section 79 Not Applicable Even if Shareholding Changed by 51% ?

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Section 79 of the Income Tax Act provides that if a closely held company shareholding changes to the extent of 51 % of voting power , the losses of the company (except brought forward unabsorbed depreciation or development rebate) are not allowed to be adjusted and carried forward . The provision was brought in the I.T.Act to prevent tax evasion by purchase of loss making comapny and using their accumulated loss to adjust the current profit earned by another company. There are many conditions given in section 79 , but this post is dedicated to most common test tax authorities take while scrutinizing the case – whether the shareholding of the private company even if changed by more than 51 % should devrive carryforward and set off of lossess even if overall voting power remain with same set of owners , although in different percentage  .

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