TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 649
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....entitled to carry forward accumulated capital loses, as disclosed in the application to the present Assessment Year 2011­12 and thereafter, under section 74 of the Income Tax Act, 1961, notwithstanding the reorganization of the Applicant effective from April 19, 2010?" The impugned order dated 21st February, 2018 answered the above question in the negative Thus, holding that the applicant is not entitled to carry forward accumulated loses to the Assessment Year 2011-12 and, thereafter, under Section 74 of the Act. 3. At the very outset, Mr. Tejinder Singh, learned Counsel for the Respondents raised a preliminary objection with regard to the Petitioner Nos.2,3 and 4 being parties to this Petition. This in view of the fact that, they were not the applicants before the AAR, leading to the impugned order dated 21st February, 2018. It is pointed out that, AAR was approached only by Petitioner No.1 herein above as applicant therein, raising the above question for Advance Ruling. The Petitioner Nos. 2 to 4 herein, were not parties before the AAR and the impugned order was passed in the context of the question raised by Petitioner No.1 alone. Therefore, Petitioner Nos. 2 to 4 have no....
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....ss Trust. Thus, it was an entity incorporated/ set up in USA. (ii) On 19th April, 2010, Petitioner No.1 was re­organized / converted itself from a trust into a Limited Liability Company (LLC) in accordance with the Laws of the State of Delaware, USA. This was pursuant to the Trust Act and LLC Act in State of Delaware, USA. This conversion was pursuant to Section 3821 of the Trust Act and Section 214 of the LLC Act from a statutory trust to LLC. The above Sections of the Trust Act and LLC Act in Delaware, USA, inter alia provides that, when the statutory trust has been converted into LLC, for the purposes of law of the State of Delaware, USA, the LLC would be deemed to be the same entity as the trust. Therefore, such conversion will not constitute a creation of a new entity. (iii) Consequent to the above conversion, Securities and Exchange Board of India (SEBI) by a communication dated 4th August, 2010 addressed to one M/s. Aberdeen Asset Management Ltd., informed it that the name of the following investment series (fund) has been changed as under:­ Sr.No. Old Name New Name SEBI Reg. No. 1 Aberdeen Delaware Business Trust Asia Pacific (Ex-Japan) Fund Aberdeen Asia P....
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....by some other assessee. Thus, the above question was answered in the negative i.e. against the Petitioner. 7. Thus, this Petition challenges the impugned order dated 21st February, 2018 of the AAR. 8. Mr. Kaka, learned Sr. Counsel in support of the Petition submits as under:­ (i) The Petitioner No.1 was earlier constituted as a statutory trust under the laws of State of Delaware, USA. It was on 19th April, 2010 that the Petitioner was converted from a statutory trust into a LLC under the laws of the State of Delaware, USA. However, under the law of Delaware, in particular, in view of Section 3821 of the Trust Act and Section 214 of the LLC Act, the trust when converted into a LLC in accordance with the law of State of Delaware, USA, would be deemed to be the same entity as it was before the conversion. Thus, Petitioner No.1 being the same entity both before and after its conversion, the Petitioner No.1 is entitled to carry forward its losses for the earlier year under Section 74 of the Act; (ii) In terms of Private International Law, the status of a company which is incorporated abroad is determined with reference to the foreign laws. In this case, the laws of State of Dela....
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....m benefit of Section 74 of the Act. In support, attention was invited to Section 80 of the Act which permits the carry forward of losses only when return of income is been filed, claiming loss for the purposes of being set off under Section 74 of the Act. In this case, admittedly, Petitioner No.1 has not filed any return of income, claiming such loss; and (d) Attention was drawn to the fact that SEBI had allowed the same registration even after change in name of five of its series (funds), however, the application made by the Petitioner was in respect of only three of the series (funds) out of the five series (fund), operating in India. It was submitted, if all of them, as contended by the Petitioner constitutes a part of the Petitioner, then the set off of loss and profit in each of the series should have been worked out, inter se and the return of income ought to have been filed by the Petitioner with the income tax authorities. This has admittedly not been done. 10. We have considered the rival submissions. At the very outset, it must be pointed out that neither the AAR nor the Respondent dispute the fact that, in accordance with principles of Private International Law, the st....
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....cribed form as to be filed, as if it was a regular return of income under Section 139(1) of the Act. It is not the case of the Petitioner either before the AAR or even before us that, it had filed any return of income even under the Act. Therefore, though in principle, there can be no dispute that the decision of the Supreme Court in Technip (supra) would in Private International Law decide that the status of the Petitioner No.1 as LLC would continue in law to be the same as it was in its earlier avtar/ before conversion, as a Trust. However, the same would not by itself meet with the requirements provided under the Act so as to enable the party to carry forward the loss under Section 74 of the Act. In fact, this distinction is brought out by the Supreme Court in Technip (supra) in paragraph 18 thereof, which reads as under:­ " This general rule regarding determination of status by the lex incorporation is will not apply when the issue relates to the discharge of obligations or assertion of rights by a corporation in another country, whether such obligation is imposed by or right arises under the statute or contract, which is governed by the law of such other country." 12. Th....