ADVICE REQUIRED IN THIS MATTER

[RAVIKUMAR DHANDHANIA]

We have taken over management along with 52% shares of an unlisted public limited company during the AY 2005-06. At that time company is having business loss as well as depreciation loss. We have claimed business loss up to AY 10-11 and depreciation loss from 10-11 to AY 14-15. We have also claimed business loss, under MAT up to AY 13-14 and paid MAT from AY 14-15.

During the AY 12-13 We have demolished a factory building by retaining only boundary wall and a security room, we have kept the building value of this retained portion in books. balance value which is loss on demolition on buildings at the tune of ₹ 84 lakhs adjusted in P&L.

After taking over the management we have got two assessment orders AY 06-07 & AY 08-09 under section 143(3) with NIL arrears.

In AY 12-13 we got another assessment order under section 143(3) but this time the officer denied the business loss during the previous management under section 79 and disallow the building demolition loss in this year. and we have got notice notice under section 142(1) for AY 08-09, 09-10,10-11, 11-12.

Please advice.

A chart a given below for the details of loss adjusted during these years

Loss carried forward statement
S.No	Asst. year	Business	Depreciation	Total
		Loss	Loss	Loss	Profit	Bal. Dep C/o
1	1996-97	0	6403979	6403979
	Adj 2003-04		2739437			3664542
2	1997-98	209223	6116424	6325647		6116424
	Adj 2004-05	209223
3	1998-99	18778042	15920338	34698380		15920338
	Adj 2004-05	6216525
	Adj 2005-06	9640860
	Adj 2006-07	2920657
4	1999-00	11444780	15856667	27301447		15856667
	Adj 2006-07	2839538
	Bal	8605242
	Adj 2007-08	2790126
5	2000-01	24241027	12113296	36354323		12113296
	Adj 2008-09	2975139
6	2001-02	5621859	9299851	14921710		9299851
	Adj2009-10	4009864
7	2002-03	360357	7207753	7568110		1765800
	Adj 2010-11	360357	5441953
						64736918
8	2003-04				3088346
9	2004-05				6425748
10	2005-06				9640860
11	2006-07				5706195
12	2007-08				2790126
13	2008-09				2975139
14	2009-10				4009864
15	2010-11				5802310	-5441953
16	2011-12				6904013	-6904013
17	2012-13				10533899	-10533899
18	2013-14				10361601	-10361601
19	2014-15				7577608	-7577608
						23917844

[DR.MARIAPPAN GOVINDARAJAN]

It is better to get the advice from the Chartered Accountants, who are experts in this area.

AI Summary

Change of ownership restrictions on loss carry forwards may bar set off and challenge demolition and depreciation claims. Change of ownership after acquisition of majority shares raises whether loss carry forwards and unabsorbed depreciation from the previous management remain available; a demolition loss recognised in profit and loss was disallowed by the tax officer while business losses from prior management were denied under the change of ownership restriction, producing contested assessments, MAT adjustments, and multiple procedural notices against the company.