42. (1) The provisions of sections 37, 38, 39, 40 and 41 shall have effect subject to the conditions and limitations set out in this section.

(2) [Omitted by section 6 of অর্থ আইন, ১৯৯৫ (১৯৯৫ সনের ১২ নং আইন).]

(3) In the case of ¹[a firm],-

(a) Where the assessee is the firm, the loss sustained by it under any head of income shall be set off under section 37 only against the income of the firm under any other head and not against the income of any of the partners of the firm; and

(b) where the assessee is a partner of the firm, he shall not be entitled to have any loss, sustained by the firm carried forward and set off against his own income.

²[(3A) Where the assessee is an Association of Persons, the loss sustained by it under any head of income shall be set off under section 37 only against the income of the Association of Persons under any other head and not against the income of any of the members of the Association of Persons.

(3B) Where the assessee is a member of the Association of Persons, he shall not be entitled to have any loss sustained by the Association of Persons carried forward and set off against his own income.”]

(4) Where any person carrying on any business or profession has been succeeded in such capacity by another person otherwise than by inheritance, no person, other than the person incurring the loss, shall be entitled to have the loss in such business or profession set off against his income under any other head.

(5) In the case of a firm in the constitution of which a change has occurred,-

(a) the firm shall not be entitled to set off so much of the loss proportionate to the share of a retired or deceased partner as exceeds his share of profits, if any, of the income year in the firm; and

(b) a partner of the firm shall not be entitled to the benefit of any portion of the said loss as is not apportionable to him.

(6) Where, in making an assessment for any year, full effect cannot be given to the allowances referred to in section 29(1) (viii) owing to there being no profits or gains chargeable for that year or such profits or gains being less than the allowance then, subject to the provisions of sub-section (7), the allowance or part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following year and be deemed to be part of that allowance or if there is no such allowance for that year, be deemed to be the allowance for that year and so on for succeeding years.

(7) Where, under sub-section (6), depreciation allowance is also to be carried forward, effect shall first be given to the provisions of sections 38 and 39 (2).

³[(8) In a scheme of amalgamation, the amalgamated company shall have the right to carry forward the accumulated loss and the unabsorbed depreciation of the amalgamating company as if the loss or the unabsorbed depreciation, as the case may be, has been the accumulated loss or the unabsorbed depreciation of the amalgamated company in the income year in which the amalgamation took place.]