TaxTMI 
TaxTMI 
2009 (9) TMI 623
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....the present case as Explanation 1 to section 10A(9) has been inserted with effect from April 1, 2001, and will apply only to those entities which for the first time got entitled to exemption under section 10A of the Act with effect from April 1, 2001, and it will not apply to those entities which have become entitled to Explanation 1 under section 10A of the Act on the date prior to April 1, 2001, as in the present case, the exemption has been available to the appellant from the assessment year 1998-99. In other words, whether Explanation 1 has retrospective operation as held by the Appellate Tribunal or whether it has prospective operation as contended by the appellant ?" The facts 2. The appellant is a private limited ....
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....eld that the percentage of shares of the company held by the shareholders in the year in which the undertaking was set up, was reduced to less than 51 per cent, i.e., 42.63 per cent. (in the year under consideration) of the shares as against 100 per cent. held previously by the Dedhia group. He, as such, held that it is clearly established that the beneficial interest in the undertaking is transferred. He applied the provisions of Explanation 1 to section 10A of the Act. 4. Being aggrieved by the aforesaid order of the Assessing Officer, an appeal was preferred before the Commissioner of Income-tax (Appeals) wherein the Commissioner of Income-tax (Appeals) confirmed the order of the Assessing Officer. Consequently, an appeal came ....
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....he appellant company by holding 51 per cent. of the voting power irrespective of the number of shares held by them. It is thus submitted that the promoters of the appellant-company viz. Shri Aatish Dedhia and Shri Nanji Dedhia are continuing to have 51.42 per cent. of the voting power even though the number of shares held by them are 42.63 per cent. of the total shares issued by the appellant-company. 7. The learned counsel for the appellant further submitted that during the previous year relevant to the assessment year 2001-02 the ownership of the beneficial interest in the appellant-company is not transferred by any means and, therefore, the appellant-company is entitled to deduction under section 10A(1) of the Act. 8.....
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....for dismissal of appeal with costs. Consideration 10. Having heard rival parties, before considering the rival submissions, it is necessary to turn to Explanation 1 of section 10A(9), which provides that the promoters of the appellant-company should continue to hold shares of the company carrying not less than 51 per cent of the voting power. The said Explanation reads as under : "Explanation 1.-For the purposes of this section, in the case of a company, where on the last day of any previous year, the shares of the company carrying not less than 51 per cent of the voting power are not beneficially held by persons who held the shares of the company carrying not less than 51 per cent. of the voting power on the last day of the....
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....ons of the Companies Act, 1956. 13. Section 86 of the Companies Act has been substituted by the Companies (Amendment) Act, 2000 with effect from December 13, 2000 whereby a company incorporated under the Companies Act, 1956, has been allowed to issue two kinds of shares viz., "equity shares" and "preference shares" and the equity shares can be with voting rights or with differential rights as to dividend, voting or otherwise in accordance with such rules as may be prescribed. Accordingly, the Companies (Issue of Share Capital with Differential Voting Rights) Rules, 2001 have been framed, which permits the issuance of equity shares with differential voting rights. Accordingly, the appellant-company has issued shares without voting ....