TMI Blog2014 (12) TMI 1407X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record to indicate that as to how Tata Industries Limited and Tata Power Co. Ltd. have been treated by the Department/Revenue as companies in which public are substantially interested. Section 79 provides for carry forward and set off losses in case of certain companies. That refers to a change in the share holding pattern taking place in a previous year in the case of a company, not being a company in which the public are substantially interested. Therefore, the prohibition which is carved out by this section becomes applicable. Obviously, therefore, if it is a company in which public are substantially interested, applicability of section 79 is ruled out. In the present case, we are not concerned with the section 43A of the Indian Companies Act. So long as the record indicated, the share holding pattern and the details which are set out at para 20 of the Tribunal's order which was undisputed, then, the Tribunal was justified in directing the Assessing Officer to allow the claim of brought forward losses. We do not see any substantial question of law arising for determination and consideration in this Appeal. Once the factual position and emerging from the record is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted. 2] Mr. Suresh Kumar submits that the Assessee filed a return of income declaring NIL income. That was processed under section 143(1) of the Income Tax Act, 1961(for short I.T. Act). During the assessment proceedings, the Assessing Officer, inter alia, disallowed certain amount. That was towards foreign exchange loss, set off of brought forward losses under section 79 of the Income Tax Act. He also computed the book profit at Rs.16,45,76,748/ under section 115JB of the Income Tax Act. The order of assessment was passed on 19th March, 2004. 3] The Assessee preferred an Appeal to the Commissioner of Income Tax (Appeals) and which has been partly allowed. The Assessee preferred a further Appeal before the Income Tax Appellate Tribunal. Mr. Suresh Kumar submits that the Tribunal erred in law in allowing the set off of brought forward losses and by holding that the Assessee Company was deemed to be a company in which public is substantially interested. It is this finding and conclusion which enabled the Tribunal to eventually hold that section 79 of the Income Tax Act is not applicable. However, the Assessee is a private company and it cannot be held to be one in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, therefore, falls within section 2(18)(b)(B)(c) of the Act, is not correct. The Legislature has deliberately included Companies registered under section 25 of the Companies Act in the list of companies in which public are substantially interested and excluded the deemed companies under section 43A of the Act. The company falling under section 43A of the Indian Companies Act, 1956 cannot be treated as company in which public is substantially interested. He relied upon the voting power as on the last day of the year to which losses pertain and the year in which claim of carry forward and set off of losses has been made. He concluded that the voting power has changed more than 51% and, therefore, the Appellant will not be entitled to the benefit of carry forward and set off of losses. He, therefore, upheld the order of the Assessing Officer. 7] In relation to this question, the Tribunal firstly reproduced section 2(18)(b)(B)(c) of the Act in para 19 of its order, thereafter, it referred to the share holding pattern of the Assessee. 8] It, then, concluded that the chart shows that shares of Tata Industries Limited have been transferred to Tata Power Co. Ltd. Both Tata Industr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Directors/Appellants before the Hon'ble Supreme Court were on the Board of a company known as M/s. Rajmohan Cashews Ltd. The assessment was completed and a demand was raised of Rs.56,00,000/ . The amount was not paid for various reasons. The Directors were held responsible and liable to pay the tax due in view of provisions of Section 179 of the Income Tax Act, 1961. This order was challenged but the Appellants/Directors could not succeed. At no stage, a point was raised that the company was not a private limited company and, therefore, provisions under section 179 of the Income Tax Act were unjustified. However, subsequently this objection was raised but it was rejected by the Commissioner of Income Tax. The Writ Petitions were filed before the High Court and they came to be dismissed. The letter was produced that the company has become a public limited company by virtue of section 43A of (1A) of the Companies Act with effect from 1st October, 1975. This letter was dated 26th February, 1977 but no copy or record of this letter was found in the office of the Registrar of Companies and, therefore, the Writ Petition came to be dismissed by holding that this was a fabricated docum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in accordance with the view taken and guidelines issued by the Institute of Chartered Accountants of India (ICAI), then, the Tribunal's conclusion can be held to be justified. 14] In the present case, the Assessee specifically argued that the Profit and Loss Account and balance sheet of the company has been prepared and maintained in terms of section 211(3A) and section 211(3C) of the Indian Companies Act, 1956. The accounting standards which have been issued by the ICAI are applied and followed. The depletion on producing properties has been calculated as per the guidance Note on accounting of oil and gas producing activities issued by the ICAI. Mr. Suresh Kumar could not dispute that these accounting standards and the guidelines were specifically relied upon before the Commissioner (Appeals). The reliance thereon is to be found in para 10.1 of his order. However, he still proceeds to uphold the order passed by the Assessing Officer. While correcting the Commissioner on this count, the Tribunal notes the argument of both sides. From para 25 onwards, it refers to the contention and particularly whether the Assessee can claim depletion of producing properties as depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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