TaxTMI 
TaxTMI 
2018 (4) TMI 1282
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.... Year (AY) 2011-12. 2. In this appeal, the assessee seeks to assail the action of the Pr.CIT in invoking section 263 of the Act and contends that the subject assessment orders framed under s.143(3) of the Act passed by the Assessing Officer (AO) cannot be termed as erroneous and prejudicial to the interests of the revenue. 3. The relevant facts in brief are that the assessment under s.143(3) of the Act for AY 2011-12 was completed by the AO vide its order dated 21/03/2014 determining the total loss at Rs. 6,69,65,830/- after making certain adjustments to the loss declared by the assessee. Thereafter, the Pr.CIT in exercise of his revisionary power, issued notice under s.263 of the Act calling upon the assessee to show-cause as to why ....
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....sment order so passed is erroneous in so far as it is prejudicial to the interests of the revenue for the reason that the AO has failed to conduct requisite enquiry with respect to allowability of carry forward of loss incurred having regard to the provisions of section 79 of the Act owing to substantive change of shareholding pattern of assesseecompany. It was observed by the Pr.CIT that the AO has wrongly accepted the claim of carry forward of business losses for set off to the extent of Rs. 924.43 lakhs and consequent short levy of tax in the vicinity of Rs. 277.35 lakhs. It was inter alia noted by the Pr.CIT that as per the tax audit report filed by assessee, it is manifest that there is a change in share holding of the assessee-company....
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....ed that one can see from the aforesaid transfer that the beneficial ownership continues with the same holding company despite transfer of shares of the assessee-company by the ultimate parent company to another wholly owned subsidiary company which in turn now holds shares of the assessee-company. The Ld.AR accordingly contended that in the absence of change in the 'beneficial' ownership of shares, section 79 has no application on facts. It was thus submitted that the assessment order passed under s.143(3) is neither erroneous nor prejudicial to the interests of the revenue. The Ld.AR next submitted that the facts in issue are squarely covered by the decision of the Hon'ble Karnataka High Court in the case of CIT vs. AMCO Power Systems Ltd.....
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....ing is not permissible to be carried forward for set off against future losses in view of the restrictions placed under s.79 of the Act. Consequently, the Pr.CIT quantified the irregular allowance of carry forward business loss as well as purported short levy of tax thereon. The Pr.CIT has also alleged that the assessment has been completed in a perfunctory manner endorsing the claim of carry forward of business losses for set off in future assessment year without conducting any enquiry necessitated in this regard in the light of section 79 of the Act. 9. To begin with, we shall examine the central issue as to whether the embargo placed under s.79 of the Act is applicable in the facts of the case or not. As pointed out, the 100% voting p....
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....also take note of the expression "held" used in section in distinction to the expression "owned". Needless to say, the expression held is far more elastic to cover the situation whereby if a person is found capable of influencing the voting rights to the extent of specified percentage (51%), section 79 will not be triggered. Therefore, while the legal ownership might have changed, the ownership/control/voting power of the assessee-company continues to be beneficially held by the same owner. This inevitably means that the cause for issuance of notice under s.263 ceases to exist. 10. In view of the discussion noted above, we find considerable merits in the plea on behalf of the assessee that section 79 has not application in the absence of....