TaxTMI 
TaxTMI 
2012 (6) TMI 211
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....ding of the company in terms of section 79 of the Act. 3. Briefly stated the facts of the case are that the assessee claimed set off of brought forward business loss of Rs. 64.11 lakh for assessment year 1998-99 against the income of the relevant year i.e. assessment year 2006-2007. The assessee company was asked to submit its shareholding pattern as on 31st March, 1998 and 31st March, 2006. From the shareholding pattern submitted by the assessee which has been reproduced in the assessment order, the A.O. observed that as on the year ending 1998 M/s. Concept Reality & Securities Limited held 1,22,280 equity shares, being 58.12% of the total capital. When compared with the shareholding pattern as on 31st March, 2006, the Assessing Officer....
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....e Assessing Officer did not give adequate time to the assessee for presenting the necessary details depicting the non-applicability of the provisions of section 79. The learned CIT(A) called for remand report from the A.O. and after considering the assessee's submissions, upheld the assessment order on this issue. 4. We have heard the rival submissions and perused the relevant material on record. The first contention raised on behalf of the assessee is that there was no change in the shareholding pattern of the company within the meaning of section 79 because Shri D.Ramesh Tainwala is director in M/s. Concept Reality & Securities Limited, which company initially held 58.12% share in the assessee-company as on the year ending 1998 and sub....
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.... not less than fifty-one per cent. of the voting power on the last day of the year or years in which the loss was incurred....". From the prescription of this section, it is obvious that if there is change in the shareholder pattern, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year. However it is relevant to note that it is not any nominal change in the shareholding pattern which works to the detriment of the company. This provision prohibiting set off applies only when there is change in the share holding pattern by not less than 51% of the voting power beneficially held. The learned AR has over emphasized on the argument that there be considered no change ....
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....hareholding of M/s Concept Realty was reduced to nil as on 31st March, 2006 as against more than 51% of the shareholding of the assessee company as on the year ending 31.3.998, in our considered opinion, the necessary condition for invoking the provisions of section 79 was rightly activated. For these reasons we uphold the impugned order on this issue. 6. It is noticed that though the assessee initially raised the theory of cross gifts between the family members of Shri Ramesh Tainwala, but no evidence was adduced as called for by the Assessing Officer in this regard. The position remained the same before the learned CIT(A) as well as us. In the absence of any supporting evidence to show the making of cross gifts, we find that this conte....