TaxTMI 
TaxTMI 
2023 (11) TMI 1042
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....of which the Assessing Officer (AO) observed that the Assessee being a company is engaged in the business activity of running Hospital business / multispecialty Hospital at Navi Mumbai and during the year under consideration derived its income from "Business & Profession". 2.1 The AO further by observing that during the year the Assessee had adjusted the brought forward losses from earlier years against the business income of Rs. 37,09,306/-, vide order dated 22.02.2016 asked the Assessee to furnish the details, in response to which the Assessee furnished its submissions. By perusing the submissions, the AO by noticing "that during the AY 2012-13 i.e. previous year, there was a change in shareholding pattern of the Assessee-company. Based on this, all brought forward losses upto 01.04.2012 were disallowed under section 79 of the Act by the then AO in his order dated 26.03.2015 under section 143(3) of the Act. Thus, no loss was allowed to be carry forward on completing the assessment of the Assessee for AY 2012-13" vide noting dated 07.03.2010 show-caused the Assessee as to why brought forward losses adjusted against the income of Rs. 37,09,306/- should not be disallowed on the bas....
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....business loss not allowed to be carried forward. The assessing officer is directed to verify the correct figures as far as carry forward business loss is concerned. The remaining business loss to be carried forward is Rs 18,71,25,561. The assessing officer can set off unabsorbed depreciation or business loss under MAT computation. Book profit is (84910475). Since the book profit is negative loss cannot be set off here. But business loss and depreciation is allowed to be carried forward under MAT computation. Under normal computation sec 79 is not applicable here following the decision in the case of Orra Fine Jewellery where in it was held that 'the assessing officer can examine the applicability of provisions of sec 79 only in the year in which loss is set off and not in the year in which assessee claims loss to be carried forward. Applying this decision it is held that assessee is eligible to set off loss under provisions of sec 79 in this year since loss is set off against income returned. Subject to the outcome of the appeal decision in the case of AY 12-13 order already passed, it is held that assessee is eligible for set off unabsorbed business loss and depreciation un....
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....hen AO. 6.4 The Assessee being aggrieved preferred 2nd appeal before the Hon'ble Tribunal, who vide order dated 24-07-2023 in I.T.A. Nos. 3240/Mum/2022 (A.Y. 2012-13) and I.T.A. No. 204/Mum/2023 (A.Y. 2014-15) allowed the brought forward losses, by concluding as under: 5. We heard both the parties on this issue and perused the record. The above said issue revolves around Section 79 of the Act. Hence we extract below the relevant portion of the provisions of sec.79(1) of the Act:- Carry forward and set off of losses in case of certain companies. "Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place during the 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, unless 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 the company carrying not less Hiranandani Healthcare Pvt. Ltd. 3 than fifty-one per cent ....
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....sions of section 79 of the Act. 9. We heard the rival contentions and perused the record. There is no dispute with regard to the fact the assessee company is held by two share holders, viz., FHL and FHHPL, both in the years in which losses were incurred and in the years in which the said accumulated losses are sought to be set off. A careful perusal of the section 79 would show that the said provision bars setting off brought forward losses if the shares of the company carrying not less than 51% of the voting power were not the beneficially held by the very same persons in the years in which the losses were incurred and the years in which the said loss was sought to be set off. The contention of the assessee is that the use of expression "persons" in section 79 of the Act would signify that the 'group of shareholders' in contrast to a single person. If the 51% of voting power is held by very same group of persons, then the provisions of sec. 79 would not be applicable, meaning thereby, the inter se change between the same group will not be hit by sec.79 of the Act. 10. In the instant case, we noticed that there are only two shareholders, viz., FHL and FHHPL. Both the above sa....