TMI Blog2021 (12) TMI 447X X X X Extracts X X X X X X X X Extracts X X X X ..... red view that no infirmity arises from the order of the A.O whose view qua the issue in question is in conformity with the judgment of Amco Power Systems ltd.[ 2015 (10) TMI 2385 - KARNATAKA HIGH COURT] which being a view favourable to the assessee, he was obligated to follow as per the judgment of the Hon ble jurisdictional High Court in the case of Siemen s India Ltd. Anr. [ 1983 (4) TMI 3 - BOMBAY HIGH COURT] . Thus we are of a strong conviction that as the A.O while framing the assessment had taken a possible and a plausible view with respect to the issue under consideration i.e the entitlement of the assessee company to set-off its brought forward losses of the previous years as against its profits for the year under consideration, therefore, on the said count itself the CIT was divested of his jurisdiction to have revised the assessment order u/s 263 of the Act. We, thus, in terms of our aforesaid deliberations are unable to sustain the order passed by the CIT u/s 263 - Decided in favour of assessee. - ITA No. 830/MUM/2021 - - - Dated:- 12-11-2021 - SHRI PRAMOD KUMAR (VICE PRESIDENT) AND SHRI RAVISH SOOD (JUDICIAL MEMBER) Assessee by : Shri Sunil M. Lala, A.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has directed the AO to examine this further. 6. The Appellant submits that considering the facts and circumstances of the case and the law prevailing on the subject, the provisions of Section 79 are not applicable in the instant case and the stand taken by the Ld.CIT is not in accordance with the law. 7. The Appellant submits that it should be allowed to set-off the brought forward losses against its total income for the year under consideration. The appellant craves leave to add, alter, amend, substitute and/or modify or withdraw in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal. 2. Shorn of unnecessary details, the assessee company, viz. Bechtel France SAS, a company incorporated in France and engaged in the business of procurement and construction had set up a project office at Mumbai with site offices at Jamnagar and Hazira to build a grass root refinery and Petrochemicals Complex for Reliance Petroleum Ltd./Reliance Industries Ltd. Original assessment was framed by the A.O vide his order passed u/s 143(3) r.w.s 144C(3), dated 02.02.2018, wherein the income of the assessee was determined at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. Aggrieved, the assessee has assailed the order passed by the CIT u/s 263 of the Act, dated 25.03.2021 in appeal. Before us, it was the claim of the ld. Authorized Representative (for short A.R ) for the assessee that the CIT had traversed beyond the scope of his jurisdiction and revised the order passed by the A.O u/s 143(3) r.w.s 144C(3), dated 02.02.2018. Elaborating on his aforesaid contention, it was submitted by the ld. A.R that the CIT in exercise of his revisional jurisdiction u/s 263 had sought to dislodge the assessee s claim for set-off of the brought forward losses which was as per mandate of law and had been accepted by the A.O only after necessary deliberations in the course of the assessment proceedings. In order to buttress his aforesaid claim, it was submitted by the ld. A.R that as despite the change in the shareholding pattern of the assessee company its beneficial ownership continued to vest in its ultimate holding company, viz. Bechtel Group Inc; therefore the restrictions qua the carry forward and set-off of losses incurred by the assessee company in the previous years against its profit and gains of the subsequent years as contemplated in Sec. 79 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame shareholders post transfer of the shares as it was a mere case of an internal restructuring. Be that as it may, we are of the considered view that as Bechtel Group Inc. i.e the ultimate holding company of the assessee, despite the change in the shareholding in the assessee company from BNT International Corporation to Bechtel Ltd. i.e from one group company to another group company, had, however, by virtue of being the holding company continued to control the voting power of the assessee company, thus, the provisions of Sec. 79 of the Act restraining the allowability of the benefit of carry forward and set-off of business losses would not come into play in the case before us. Our aforesaid conviction is as per the mandate of the judgment of the Hon ble High Court of Karnataka in the case of CIT, Bangalore Vs. Amco Power Systems Ltd. (2015) 379 ITR 375 (Kar). In the said case, the Hon ble High Court finding favour with the claim of the assessee that the shareholding pattern is distinct from the voting power of the company, observed, that though the shareholding of the holding company was reduced to 6% during the year in question, however, by virtue of being the holding company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of set-off of business losses of the previous years, which may bear profits in the subsequent years after the new owner takes over the Company. For such purpose, it is provided under the said Section that 51% of the voting power which was beneficially held by a person or persons should continue to be held, then only such benefit could be given to the Company. As we have observed above, though ABL may not have continued to hold 51% shares, but Section 79 speaks of 51% voting power, which ABL continued to have even after transfer of 49% shares to TAFE, as it controlled the voting power of APIL, and together, ABL had 51% voting power. Meaning thereby, the control of the company remained with ABL as the change in shareholding did not result in reduction of its voting power to less than 51%. Now, in the present case before us, the CIT in support of his contention that pursuant to the change in the shareholding pattern the assessee company was not entitled to set-off its brought forward losses of the previous years against its income for the year under consideration had drawn support from the judgment of the Hon ble High Court of Delhi in the case of Yum Restaurants (India) Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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