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TMI Blog2015 (1) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal of the assessee. Being aggrieved by the order of the CIT(A), the revenue filed an appeal before the Tribunal. The Tribunal vide impugned order dated 30.04.2001 partly allowed the said appeal. Hence, this appeal is filed at the instance of the revenue. 3. While admitting this appeal on 18.03.2002, the Court had formulated the following substantial questions of law:- (1) Whether, the Appellate Tribunal is right in law and on facts in confirming the order of the CIT(A) who directed to allow relief of set off of business losses considering the date of allotment as the actual date of scheme of amalgamation ignoring the fact that provisions of Section 79 were clearly attracted as the effective date of amalgamation is the date from which the scheme becomes effective i.e. 1.4.1989. (2) Whether, the Appellate Tribunal is right in law and on facts in confirming the order of the Commissioner of Income Tax(A) who directed to compute the deduction u/s.80HHC considering the current year's profit without reducing therefrom the unabsorbed depreciation and unabsorbed investment allowance ? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; "Section 79 Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place in a previous year in the case of a company carrying not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year unless - (a) On the last day of the previous year the shares of the company carrying not less than fifty one per cent of the voting power were beneficially held by persons who beneficially held share of the company carrying not less than fifty-one percent of the voting power on the last day of the year or years in which the loss was incurred. Provided that nothing contained in this section shall apply to a case where a change in the said voting power takes place in a previous year consequent upon the death of a shareholder or on account of transfer of shares by way of gift to any relative of the shareholder making such gift. Provided further that nothing contained in this section shall apply to any cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bombay High Court in the case of Brooke Bond India Ltd. Vs. Dinkar Landge 56 Com Cases 1. In this it has been held that a period does not case get the rights of a member during the pendency of the petition of amalgamation, even though the proposed scheme of amalgamation is within the retrospective effect. The appellant relied on the above decision and mentioned that the shareholders of the appellant company till such time the scheme is approved by the Bombay High Court. 3.4. In the light of the above arguments put forth and against the addition it is necessary to examine certain aspects of the scheme of amalgamation vis-a-vis section 79 very closely. The relevant portion of Section 79 is reproduced hereunder:- "On the last day of the previous year the shares of the Company carrying not less than fifty one percent of the voting power were beneficially held by persons wo beneficially held shares of the company carrying not less than fifty one percent of the voting power on the last day of the year or years in voting power of the last day of the year or years in which the loss was incurred." The effect of this is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon also by the A.O.) the reference is made to the Scheme becoming effective and not with effect from the date, in which , the procedural formalities as prescribed under the Companies Act, 1956 is completed. These formalities are mentioned in para 15 of the Scheme of Amalgamation which includes the approval of the High Court. Sub Section (3) of Section 391 of the Companies Act, 1956 prescribed as under:- 391(3) an order made by the Court under sub section (2) shall have no effect until a certified copy of the order has been filed with the Registrar end of the previous year and, therefore, the scheme also could not have been effective before the end of the previous year. The shares, in terms of the scheme of amalgamation also could not have been alloted or come into existence before the scheme becomes effective. The appointed date (or effective date of the scheme of amalgamation) has to be construed only reference to the profits and losses of the amalgamation company and not beyond. If the contention of the A.O. is accepted about the beneficial ownership of the shares, it may lead to some absurdity in operation. The meetings of the shar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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