1.What happens to the unabsorbed depreciation of the previous owner when there is a change in ownership?
A:When there is a change in ownership of a business, the unabsorbed depreciation of the previous owner can be carried forward and set off against the profits of the new owner. This provision is covered under Section 32(2) of the Income Tax Act, 1961. Additionally, the new owner can claim depreciation on the assets acquired from the previous owner under their ownership.
2.Can the loss incurred by the previous owner be carried forward and set off against the profits of the new owner?
A:No, the loss incurred by the previous owner cannot be carried forward and set off against the profits of the new owner. The new owner can only set off the loss against the profits of the same business in future years under Section 79 of the Income Tax Act, subject to certain conditions.
3.What happens to the loss incurred in the year of change of ownership?
A:The loss incurred in the year of change of ownership can be set off by the previous owner against their other income for that year, in accordance with the provisions of the Income Tax Act. However, the new owner cannot set off this loss against their profits.
4.Can the business loss be carried forward and set off against the income of the new owner in future years?
A:Yes, the business loss can be carried forward and set off against the income of the new owner in future years, subject to certain conditions outlined in Section 72A of the Income Tax Act. The new owner should continue to carry on the same business for which the loss was incurred, and there should not be any substantial change in the shareholding pattern of the company.
