TaxTMI 
TaxTMI 
2018 (8) TMI 1542
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....ovisions of sec. 79 of the Act. The revenue is also aggrieved by the decision of Ld CIT(A) in holding that the interest income should be netted off against interest expenditure and hence interest income should not be assessed separately. 2. The facts relating to the first issue are discussed in brief. The assessee company was earlier known as "Comfort Projects Ltd". The shareholders as on 01-04-2010 were:- (a) Manish Parekh - 1, 500 shares 15% (b) Hiten Parekh - 1, 500 shares 15% (c) Nayan Parekh - 2, 000 shares 20% (d) Arvind Desai - 5, 000 shares 50% 10, 000 shares 100% During the year relevant to the assessment year 2011-12, the assessee company w....
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.... apply to a case where a change in the said voting power takes place in a previous year consequent upon the death of a shareholder or on account of transfer of shares by way of gift to any relative of the shareholder making such gift. " 4. The assessee contended that the provisions of sec. 79 will not be applicable to a "company in which public are substantially interested". It was claimed that M/s Edelweiss Trading and Holding Ltd (which acquired the shares of assessee-company) is a 100% subsidiary of M/s Edelweiss Financial Services Ltd, a listed company. Accordingly it was submitted that as per the definition of the expression "Company in which public are substantially interested" given in sec. 2(18)(b)(B)(c), the assessee company sha....
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.... of convenience, we extract below the provisions of sec. 79 again, at the cost of repetition:- "Sec 79. Carry forward and set off of losses in the case of certain companies Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place in a previous year in the case of a company, not being a company in which the public are substantially interested, 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 unless4 (a) on the last day of the previous year the shares of the company carrying not less than fifty- one per cent of the voting power were beneficially held by persons who beneficially held shares of....
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....reholding has taken place (exceeding 49%) and (b) the company was a closely held company at the time when the change has taken place. As stated earlier, in our view, the above said two conditions have to be examined at the time when the change in shareholding takes place. 10. Now analyzing the facts prevailing in the instant case, we notice that both the above said conditions are satisfied in the instant case, viz. , (a) a change in shareholding exceeding 49% has taken place, since the entire shareholding held by earlier shareholders was acquired by M/s Edelweiss Trading and Holding Ltd. (b) on the date of change, the assessee company was a closely held company. 11. If we look at the object of introducing....
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.... a company in which public are substantially interested, after the change in shareholding, even then the provisions of sec. 79 would apply, if it was a closely held company at the time when change in shareholding takes place. 13. In the instant case, the assessee company was a closely held company at the time when the change in shareholding took place. It has become widely held company after the change in shareholding. We have held that the status of company has to be examined at the time when the change in shareholding takes place. In the instant case, the status of the company was "closely held company", i. e. , a company in which public is not substantially interested, when the change in shareholding took place. Hence, we are of the v....
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.... DG sets from a Singapore company. As per the terms of the bank to give Letter of Credit facility, the assessee has made deposits with ICICI Bank. It was stated that the assessee had availed loan of Rs. 360/- crores from its holding company named M/s Edelweiss Trading and Holding Ltd for construction of Corporate house and has paid interest of Rs. 1267. 47 lakhs on the said loan. It was submitted that the above said interest expenditure was also capitalized. It was submitted that a part of loan funds were parked with ICICI Bank as Fixed Deposit for availing Letter of Credit facility for importing DG sets for the new building constructed by the assessee. Accordingly it was submitted that the interest income should be reduced from Capital wor....