TMI Blog2023 (7) TMI 1325X X X X Extracts X X X X X X X X Extracts X X X X ..... eaning 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 assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be set off as on 1.4.2011. 4. The Assessing Officer took the view that the above said change in shareholding pattern between two shareholders, referred above, would be hit by provisions of section 79 of the Act, which bars carry forward of losses, if any, if there is a change in shareholding pattern as mentioned in section 79 of the Act. Accordingly, the Assessing Officer held that the assessee is not entitled to carry forward and set off of accumulated loss available with the assessee as on 31.3.2011. Accordingly, he rejected the claim for set off of brought forward losses both in A.Ys. 2012-13 2014-15. The learned CIT(A) also confirmed the same 5. We heard both the parties on this issue and perused the record. The above said issue revolves around Section 79 of the Act. Hence we extract below the relevant portion of the provisions of sec.79(1) of the Act:- Carry forward and set off of losses in case of certain companies. Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place during the previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in FHL is FHHPL only. Even if the voting share of FHL is increased by denting the voting share of FHHPL, yet the same would not affect beneficial ownership, since FHHPL is the ultimate beneficial owner. Accordingly he submitted that there is no change in the beneficial voting power in the instant case, as contemplated in the provisions of section 79 of the Act. 9. We heard the rival contentions and perused the record. There is no dispute with regard to the fact the assessee company is held by two share holders, viz., FHL and FHHPL, both in the years in which losses were incurred and in the years in which the said accumulated losses are sought to be set off. A careful perusal of the section 79 would show that the said provision bars setting off brought forward losses if the shares of the company carrying not less than 51% of the voting power were not the beneficially held by the very same persons in the years in which the losses were incurred and the years in which the said loss was sought to be set off. The contention of the assessee is that the use of expression persons in section 79 of the Act would signify that the group of shareholders in contrast to a single person. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inserted by the Finance Act 2012 w.e.f. 1.4.2013. Hence, the provisions of section 56(2)(viib) shall be applicable w.e.f. A.Y. 2013-14 only. Accordingly, it was submitted that the share premium cannot be assessed as income of the assessee in AY 2012-13, since sec. 56(2)(viib) is applicable from AY 2013-14 only. The assessee further submitted that the share premium has been collected on the basis of the valuation report prepared by M/s. Vinod Sunil Company, CAs, who had valued the shares of the assessee company under Discounted cash flow (DCF) method. The share value arrived at Rs. 97.74 per share by the valuers. Hence the assessee has issued shares @ Rs.100/- per share which included premium amount of Rs.90/- per share. Accordingly, the assessee contended that the premium collected by it is justified. 13. The Assessing Officer, however, did not accept the above said explanations given by the assessee. He took the view that the share premium collected by the assessee requires to be examined under the provisions of section 68 of the Act. The Assessing Officer took the view that the assessee has not offered proper explanations with regard to nature and source of share premium ..... X X X X Extracts X X X X X X X X Extracts X X X X
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