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TMI Blog2019 (1) TMI 1477X X X X Extracts X X X X X X X X Extracts X X X X ..... held by not less than 51% of the shareholders of FC OEN. FC OEN acquired 60% of the shareholding of FC Berg only in July, 1999. Irrespective of that, the new company will be entitled to claim the business loss of the amalgamated company in the assessment year relevant to that previous year in which there was change in shareholding. This is because the prohibition is only in claiming the losses of any year prior to the previous year. But 51% of the shareholding, in FC Berg, in none of the years prior to the previous year (1999-2000), was ever held by FC OEN or even FCI. Section 79 squarely applies in the case of the assessee, FC OEN Limited in so far as the claim of carry forward of losses, incurred by FC Berg, in any of the years prior t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MATHAI, SRI. KURYAN THOMAS, SRI. M. GOPIKRISHNAN NAMBIAR, SRI. PAULOSE C. ABRAHAM, SRI. P. GOPINATH (SR. ) For The Respondent (s) : SRI. P. K. R. MENON, SENIOR COUNSEL, GOI (TAXES) AND ADV. SRI. JOSE JOSEPH, SC FOR GOI (TAXES) JUDGMENT Vinod Chandran, J . The question raised in the appeal filed by two Companies; one of which was amalgamated to the other, for the assessment year 2000-01 arises on the applicability of Section 79 of the Income Tax Act, 1961 [for brevity the Act ]. The question of law is re-framed as follows: Ought not the Tribunal have held that the assessee-Company as on the last date of the previous year [1999-2000] relevant to the assessment year [2000-2001] being a Company in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 . 5. Section 79 is a measure devised by the legislature to prevent profit making companies, from claiming deduction of carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter. 7. What is relevant in considering whether the new company is entitled to claim business loss for the years prior to the previous year is sub-clause (a), which is extracted herein above. Sub-clause (a) stipulates an exception insofar as 51% of the shareholding of the company in which there was a change in shareholding in the previous year, being held by persons who beneficially hold 51% of the shares in the new company also. Hence, if FC OEN had held 51% of the shareholding of FC Berg on any years prior to the previous year, then the loss of such years could be claimed by FC OEN after amalgamation. 8. On the facts as evidenced from the particular case, we find that FC Berg was existing as on 01.04.1999, which was a company in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , is the question. For that, not less than 51% of the share holding of FC Berg on the last day of the year or years in which the loss occurred, should have been beneficially held by not less than 51% of the shareholders of FC OEN. FC OEN acquired 60% of the shareholding of FC Berg only in July, 1999. Irrespective of that, the new company will be entitled to claim the business loss of the amalgamated company in the assessment year relevant to that previous year in which there was change in shareholding. This is because the prohibition is only in claiming the losses of any year prior to the previous year. But 51% of the shareholding, in FC Berg, in none of the years prior to the previous year (1999-2000), was ever held by FC OEN or even FCI. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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