TMI Blog1993 (8) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 79 of the Act, the Department must prove not only that there was a transfer of the shareholding of not less than 51 per cent. of the voting power as per clause (a) of section 79 but also that such a transfer was with the intent to reduce or avoid the tax liability as per clause (b) of section 79 ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has been right in law in holding that section 79 of the Income-tax Act, 1961, was not attracted in the instant case and, consequently, the assessee was entitled to the adjustment of carry forward of previous loss and also unabsorbed depreciation as well as adjustment of development rebate ?" The assessee is a private limited company. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an appeal to the Appellate Assistant Commissioner. As regards the point with which we are concerned in this reference, the Appellate Assistant Commissioner allowed the appeal and he was of the view that section 79 was not attracted in this case. The Revenue approached the Tribunal by way of an appeal. In the two subsequent assessment years, viz., 1976-77 and 1977-78, a similar view was taken by the Income-tax Officer and the Appellate Assistant Commissioner and, therefore, the Revenue had filed in all three appeals before the Tribunal. All these appeals were heard together and it was held by the Tribunal that the onus was on the assessee to establish that the motive was not avoidance of or reduction in the tax liability, and that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 79 but also that such a transfer was with the intent to reduce or avoid the tax liability as per clause (b) of section 79 ?" The Tribunal declined to refer questions Nos. 2 and 3. It declined to refer question No. 2 on the ground that the finding that the shares were not acquired with a motive to avoid or reduce the tax liability is purely a finding of fact as the conclusion drawn in that behalf was on the basis of appreciation of factual evidence. It declined to refer the third question on the ground that the Tribunal has recorded the finding after considering the material on record. Whether the Tribunal was justified in not referring questions Nos. 2 and 3 is not for us to decide, as the Revenue has remained satisfied with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to be fulfilled or both the conditions should be fulfilled, then the question now stands answered by the decision of the Supreme Court in CIT v. Italindia Cotton Co. P. Ltd. [1988] 174 ITR 160, wherein it is held that the two conditions specified in clauses (a) and (b) of section 79 are intended to operate as alternative to one another. If the terms of either clause (a) or clause (b) are satisfied, the disqualification suffered by the company, by reason of a change in shareholding in the relevant previous year is removed and the company is entitled to the benefit of the provisions relating to carry forward and set-off of losses. So far as question No. 2 is concerned, we have already stated above that the Tribunal has, as a matt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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