TaxTMI 
TaxTMI 
2021 (9) TMI 952
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....advisory services as well as development of real estate and infrastructure projects. The Assessing Officer (AO) observed during the assessment proceedings that there has been a change in the shareholding patternn of the assessee during the assessment year 2014-15. When the assessee was asked to show cause as to why provisions of section 79 should not be applied and set off of brought forward losses be denied. In response, the assessee submitted the shareholding of assessee is as below :- 31.03.2013 31.03.2014 Name of the Company No. of shares % No. of shares % Tata Realty and Infrastructure Ltd. (TRIL) 3,60,000 24% 1500000 100% Actis Infrastructure Roads Ltd. (Actis) 360000 24% TRIL Highway Project Limited (THPL) 780000 52% Total 15,00,000 100% 15,00,000 100% Shareholding of THPL as below as on 31.03.2013: 31.03.2013 Name of the Company No. of shares % Tata Realty and Infrastructure Ltd. (TRIL) 6,15,000 78.85% Actis Infrastructure Roads Ltd. (Actis) 1,65,000 21.15% Total 7,80,000 100% The assessee submitted that Tata Realty & Infrastructure Ltd. (TRIL) held 65% of shares i....
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.... 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 the company carrying 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: Provided that nothing contained in this section shall apply, to a case where a change in the said voting power and shareholding 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; Provided that nothing contained in this section shall apply, to to any change in the to any change in the shareholding of an Indian company which is a subsidiary of a foreign company as a result of amalgamation or demerger of a foreign company subject to the condition that fifty-one per cent shareholders of amalgamating or demerged foreign company continue to be the shareholders of the amalgamated or the resulting foreign company. (b) [Omitted by the Finance Act, 1988, w.e.f. 01.04.1989] The case of the AO is that Section 79 applies, because there is a change in shareholding - earlier ....
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....examining the present case, we find that IIPL was holding 98% of the shares of the assessee company. On the other hand, 100% shares of IIPL were held by four persons of the family who were having the control and management of the IIPL as well as of the assessee company. Because of the merger of IIPL into the assessee company, the former came to an end as a result of which the shares of amalgamated company were allotted to the shareholders of IIPL. Thus, it is clear that there is no change in the management of the Company which remained with the same family (set of persons) who was earlier exercising control. The assessee submitted a list of directors on the Board of the two companies prior to merger as well as the directors on the Board of merged company. It remained in the same hands. Thus, the Ld. Commissioner of Income Tax (Appeals) is correct in holding that change in more than 51% was due to merger in two companies. There was no change in the part of the Ld. CIT(A)'s adjudication wherein he has referred the Circular No. 528 dated 16.12.88 and considered the case of the present merger as akin to death of share holder. He also held that in the case of death of a living person th....
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.... the said losses. However, the provisions of Section 79 should not apply when the "voting power" does not change, inasmuch as there is a reorganization/transfer of shares within the same group whereby the beneficial holding exceeds 51% in the year of loss, as also in the year of set off. The High Court also drew strength from The observations of the Supreme Court in the case of CIT vs. Italindia Cotton Co. (P) Ltd. (174 ITR 160) while arriving at its decision, and ultimately decided the issue in favour of the assesses. Considering the above decisions, and the relevant facts, I hold that the appellant is entitled to set off the business loss brought forward from earlier years, as the provisions of Section 79 are not triggered in its case Grounds of appeal nos. 1, 2 and 3 are allowed." 4. Aggrieved with the above order, the Revenue is in appeal before us and raised following grounds of appeal : 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing set-off of brought forward loss from Business & Profession of Rs. 4,98,10,718/- in AY 2014-15. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allow....
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....neficial ownership as far as shareholding pattern in the assessee-company as on 31.03.2013. The shareholding pattern of TRIL in assessee-company is effectively increased from 24% to 76%. Considering the fact that the assessee is a subsidiary of TRIL, Actis and THPL before merger and after merger still a subsidiary of TRIL. It was brought to our notice that as on 31.03.2014 TRIL holds 100% shares of the assessee-company. In our considered view, effectively there is no change in the management as well as voting rights in the assessee-company. The company TRIL controls whole management directly as well as indirectly at the time of incurring loss and controlling directly after merger. It is effectively, the whole companies engaged in the same type of business and part of same group. The whole group managed by the same set of Directors and shareholders. 7.1 Effectively, we noticed that the Department is in appeal against the order of Ld. CIT(A) and with the plea that the Ld. CIT(A) has ignored the judgment of the Hon'ble Delhi High Court in the case of Yum Restaurants India Pvt. Ltd. (ITA No. 349/2015). 8. On careful consideration of the above decision, we noticed that Yum Restaurants....