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2023 (7) TMI 1325 - ITAT MUMBAIDenial of Set off brought forward losses by applying provisions of section 79 - Change in share holding pattern between both the shareholders - i.e., the holding of FHL increased to 85%, while holding of FHHPL got reduced to 15% - AO said that said change in shareholding pattern between two shareholder would be hit by provisions of section 79 of the Act, which bars carry forward of losses - contention of the learned AR that the provisions of section 79 would be applicable only if the shares of the company carrying not less than 51% of the voting power beneficially held by “certain persons” were transferred to “other persons” HELD THAT:- In the instant case, we noticed that there are only two shareholders, viz., FHL and FHHPL. Both the above said shareholders, as a group, has beneficially held 51% of the voting power in both the years, i.e., the year in which loss was incurred and the year in which the loss was sought to be set off, meaning thereby, there is no change in the shareholding pattern of the group. We further noticed that the FHHPL is holding company of FHL. Hence, the increase in shareholding of FHL in the assessee company, in any case, would not result in the change in the voting power of the shareholders. Accordingly, we find merit in the contentions of the learned AR that the provisions of section 79 will not be applicable in the facts of the present case. Hence, we are not able to agree with the view expressed by the tax authorities that the change in individual shareholding of the shareholders would also attract provision of section 79 - Accordingly, we set aside the order passed by the learned CIT(A) on this issue and direct the AO to allow set off brought forward losses. Addition u/s 68 - assessee has not offered proper explanations with regard to nature and source of share premium received by it - HELD THAT:- The provisions of sec.68 would be attracted when the assessee fails to prove the identity of the creditor, credit worthiness of the creditor and genuineness of transactions. The examination u/s 68 of the Act has to be with reference to the creditor who has given money to the assessee. We notice that there is no doubt in the mind of tax authorities about the three ingredients mentioned above in respect of share premium amount of Rs.27 crores collected from FHL, i.e, the AO has seems to have accepted that the FHL has the capacity and credit worthiness to subscribe to the shares. The addition has been made only on the ground that the assessee has failed to substantiate the share premium @ Rs.90/- per share, i.e., the capacity of the assessee to charge high share premium is being questioned by the tax authorities. The above said question would not be covered by the provisions of sec.68 since we have noticed earlier the provisions of sec 68 would be directed towards the creditor only. Decided in favour of assessee.
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