34A. Set-off of losses of certain companies:-

(1)   Where an assessee, being a company listed on a registered stock exchange in Pakistan, owns the entire share capital of another company (hereinafter called the 'subsidiary company') in any income year, being an income year relevant to the assessment year ending on the thirtieth day of June, 1982, or any assessment year thereafter, the loss of the subsidiary company under the head ‘Income from business or profession’ (not being a loss on account of depreciation allowed under clause (v) of sub-section (1) of section 23 or a loss to which section 36 applies) in respect of the said assessment year as has been determined by an order under section 62, 63 or 65 and as had not been set-off under section 34 shall, at the option of the assessee and subject to the provisions of sub-section (2), be set-off against the income, if any, of the assessee in respect of the said assessment year, and where the said loss cannot wholly be so set-off, so much of the loss as had not been set-off, or the whole of the loss where the assessee has no income chargeable to tax in that year, shall be carried forward by the subsidiary company in accordance with the provisions of section 35; and the said loss of the subsidiary company in respect of the two assessment years immediately succeeding the said assessment year shall, at the option of the assessee, be set-off and carried forward in the manner as aforesaid:

Provided that nothing contained in this sub-section shall prevent the assessee from claiming set-off of the said loss of the subsidiary company in respect of the said assessment year or years if it has not been determined as aforesaid at the time of filling of return or returns of income by the assessee in respect of the said assessment year or years.

(2)   Nothing contained in sub-section (1) shall apply unless-

(a)    income of the subsidiary company under the head 'Income from business or profession' is liable to tax under this Ordinance in the income year in which it has sustained loss under that head;

(b)    a scheme for the profitable operation of the business of the subsidiary company submitted by the assessee has been approved, before the commencement of the income year referred to in sub-section (1), by-

(i)    the Pakistan Industrial Credit and Investment Corporation Limited;

(ii)    the Industrial Development Bank of Pakistan;

(iii)   the National Development Finance Corporation; or

(iv)   the Bankers Equity Limited; and

(c)    the assessee has, by the first day of October of the assessment year or years referred to in sub-section (1), submitted to the institution to which the said scheme was submitted by the assessee a report on the implementation of the scheme referred to in clause (b).