9911796707
TMI Blog2012 (11) TMI 623X X X X Extracts X X X X X X X X Extracts X X X X ..... " 2. The brief facts of the case are that the assessee company is running Hospital under the name and style of M/s. Peoples Heritage Hospital Limited. During the assessment proceedings the position of share holder funds of the company noted by the Assessing officer (A.O.) is as under :- "Share capital as on 31.03.2007 31.03.2008 1. Share capital 1,00,00,000 25,70,000 2. Share application money - 74,30,000" 3. The A.O. further noticed that during the year shares worth Rs. 74.30 lacs were issued/ allotted to the family members of Shri Hari Kishan Pippal, i.e. Hari Kishan himself, Mr. Anish Pippal, Ms. Benu Pippal, Ms. Geeta Pippal, Mrs. Ruchita Pippal, Mr. Parvesh Pippal, Mr. Rajesh Pippal & Mr. Rajesh Pippal meaning thereby the shares of Rs. 74.30 lacs were transferred to the Pippal family during the year. The control and management of the company was also transferred to Pippal family. The A.O. further noticed that at the time of acquisition of the company, the financial position of the company was as under :- "F.Y. 2004-05 (-)29,94,643 (business loss) (-)61,75,924 (unabsorbed depreciation) 2005-06 (-)74,28,772 (unabsorbed depreciation) 2006-07 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration has no merit in it because that was simply share application money and no shares were allotted during that year. Simply paying the share application money does not entitle any applicant of shares to al1otment of shares unless and until the same are allotted by the company. A person who has only remitted share application money can claim no stake in the company. It is only after the shares have been allotted that an applicant who had remitted the money becomes a share holder and can participate in the affairs of the company as provided in the articles of association. The shares have been admittedly allotted during the year under consideration and more than 51% of share holding has changed. The provision of sec. 79 of the Act are clearly attracted in the appellant's case. The action of the AO in disallowing the set off of claim of brought forward losses does not call for any interference, therefore, these grounds are dismissed." 6. The assessee instead of putting his personal presence filed written submission. After hearing the ld. Departmental Representative and after going through the written submissions, we notice that issue to be examined in the case under consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c 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 - (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 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 [***] : (b) Omitted by Finance Act 1988 w.e.f. 01.04.1989. [Provided that nothing contained in this section shall 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 :] [Provided further that nothing contained in this section shall apply 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 the amalgamating o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng power of 51 per cent or it was established that the shares of the company carrying not less than 51 per cent of the voting power were beneficially held by the same persons, both on the last day of the previous year as well as the last day of the year or years in which the loss was incurred, it could be presumed that there was no change in the control over the company and the disqualification imposed on the company because of the change in its shareholding would stand removed. 10. As regards the contention of the assessee in the written submission that 72.80% of total paid up share capital was introduced by the family member of Shri Hari Kishan Pippal during the F.Y. 2004-05 relevant to A.Y. 2005-06 and not in the year under consideration i.e. A.Y. 2007-08.This aspect of the matter has been dealt with by the CIT(A) in his order holding that 72.8% of total paid share capital was introduced by family of Shri Hari Kishan Pippal during FY 2004-05 and not during the year under consideration has no merit in it because that was simply share application money and no shares were allotted during that year. It was further held that simply paying the share application money does not entitle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case under consideration are that during the year under consideration share holding of the company has changed by more than 51% and management and control of the company has been passed on to Pippal family. There is unabsorbed losses of Rs.29,94,643/- of A.Y. 2004-2005. The CIT(A) rejected the assessee's contention that 72.8% of total paid share capital was introduced by family of Shri Hari Kishan Pippal during the F.Y. 2004-05and not during the year under consideration has no merit in its case because that was simply share application money and no shares were allotted during that year. The shares have been admittedly allotted during the year under consideration for the reasons whatever it may be. Therefore, after considering the totality of the facts of the case, we find that the provisions of section 79 of the Act is clearly applicable to the case under consideration and in the light of the said section 79, the A.O. has rightly disallowed the claim of set off of brought forward losses and the CIT(A) has rightly confirmed the order of the A.O. We confirm the order of the CIT(A).
12. In the result, appeal of the assessee is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X
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