TMI Blog2017 (1) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... ented upon the clause (a)and (b)of the section and their applicability to the facts of the case. Therefore, we are of the opinion that,in the interest of justice, matter should be restored back to his file for fresh adjudication.He will decide the matter after affording a reasonable opportunity of hearing to the assessee. Effective ground of appeal is decided in favour of the AO, in part. - ITA No.2788/Mum/2015 - - - Dated:- 25-1-2017 - Shri Rajendra, A.M. and Shri Pawan Singh,J.M. For The Revenue : Ms. Anu Krishna Aggarwal-DR For The Assessee : Shri K. Gopal Order u/s.254(1)of the Income- tax Act,1961(Act) PER Rajendra A.M. - Challenging the order dated 26/02/2015 of the CIT (A)-22, Mumbai the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r as well as on the last day of the March of the previous year,that as per the provisions of the Act, share-holder and companies were separate entities,that the Act did not provide direct shareholder/ indirect shareholder, that the shareholders holding 51% of voting rights as on 1/4/2009 were not holding 51% or more as on 31/03/2010, that as per the provisions of section 79 the assessee was not eligible to be set off/carried forward the losses. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority(FAA).Before him,it made elaborate submissions and relied upon certain case laws. After considering the assessment order and the submission of the assessee, he held that an assessee had to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h carry forward and set-off of losses in the case of certain companies and its provisions are as under : 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, riot 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 fiftyone per cent. of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent. of the voting power on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... words, Notwithstanding anything contained in this Chapter have been used only for the purpose of showing that whatever may have been provided in the other provisions of the Chapter as regards carry forward of losses,those provision would not apply as section 79 made a departure from those provisions.The overriding nature of the section is not to disturb the concept of loss as envisaged in these provisions but only to prevent the adjustment of brought forward loss in certain cases. iii. The expression the change in the shareholding shows that the section contemplates a change of the type referred to in clause (a) and clause (b).Clause (b) is not entirely independent of clause (a).It will apply in a case where benefit under clause (a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits after such acquisition, and they would benefit by a reduction of the tax liability on those profits on a setoff of losses carried forward from earlier years before the acquisition. The acquisition of a company in such a case would be effected by a change in its shareholding and the control over the company could be ensured by securing the beneficial ownership of shares carrying 51% or more of the voting power.If the change in the shareholding did not result in holding voting power of 51% or it was established that the shares of the company carrying not less than 51 % of the voting power were beneficially held by the same persons, both on the last day of the previous year as well as the last day of the year or years in which the los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions of the relevant sections are satisfied.Therefore, by the use of the words loss incurred and the reference to the chapter in which section 79 occurs,it is obvious that the provisions of section 79 do not apply to unabsorbed depreciation allowance/ unabsorbed development rebate.In other words,by excluding unabsorbed depreciation or unabsorbed development rebate from the content of the expression losses in section 79, there is no attempt to give any narrow interpretation to the word loss.It cannot have,in any case,a wider definition to include items which are in fact not losses under the Act, at least for the purposes mentioned in Chapter VI. 5.3. It can be safely said that the section was enacted with the object of preventi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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