9911796707
TMI Blog2022 (8) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... iating that in the assessment order dated 29.12.2008 for AY 2006-07 in the case of M/s. Kovalam Hotels Ltd., the Assessing Officer has held that the business loss of Rs.13,43,71,999/- incurred prior to the previous year 2005-06 is not eligible for carry forward due to the applicability of provisions of section 79 of the Act and therefore, no such loss was available to the assessee for set off against its profits in AY 2007-08." 2. The appellant prays that the order of the Ld. CIT(A) on the above ground be set aside and that of the AO be restored." 2. Briefly stated facts of the case are that the assessee filed return of income on 01.10.2007 declaring total income of Rs.68,57,40,290/-, which was further revised on 18/09/2008 reducing the taxable income to Rs.25,06,77,024/-. Reasons for revision of the income were cited by the assessee as claim of set off of brought forward losses and the unabsorbed depreciation in respect of M/s Kovalam Hotels Ltd., which amalgamated with the assessee company with effect from 01/04/2006 i.e. during the previous year relevant to the assessment year under consideration. 2.1 The Assessing Officer has reproduced amount of carry forward of business l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be called a company in which the public is substantially interested as it has not satisfied any of the conditions as laid down u/s. 2(18) during the P.Y. 2005-06 (A.Y. 2006-07), hence, business loss prior to A.Y.2006-07 shall not be allowed to be carried forward for future set-off. Therefore, the business loss of Rs.13,43,71,999/- which have been carried forward by Kovalam Hotels Ltd prior to the assessment year under consideration, which have already been denied by the Assessing Officer of Kovalam Hotels Ltd from being carried forward, cannot be now allowed to be set-off by the assessee in its return of income for the present A.Y. 2007-08 under consideration. Therefore, out of the total brought forward loss of Rs.25,83,74,068/-, claimed by the assessee as set off representing the brought forward losses and depreciation of Kovalam Hotels Ltd, Rs.13,43,71,999/- is being excluded and the remaining amount of Rs.12,4002,069/- is being allowed as set-off. 3. On further appeal, the Ld. CIT(A) referred to the provisions of section 79 of the Act vis-à-vis section 72A of the Act and held that in view of fact that section 72A of the Act being specific provision it has to be preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on the effective date of the scheme of amalgamation i.e. 1.4.2006, and the income of that hotel is also offered by the appellant by revising the return of income. The assets of Kovalam Hotels Ltd have been completely taken over by the appellant. When the AO of Kovalam Hotels Ltd have dealt with the case it was A.Y. 2006-07 and the appellant was holding-only 51% share and the complete merger, as per the order of Hon'ble High Court, took place from the effective date i.e. April 1, 2006. This specific date is falling in A.Y. 2007-08 i.e. the year in appeal. While the AO of Kovalam Hotels Ltd was dealing with the issue for A.Y. 2006-07 when the amalgamation had not taken place. Hence, once the amalgamation is approved by Hon'ble High Court of Bombay and the accounts were merged, provisions of section 72A only will come into play and not section 79 as held by the AO. Therefore, it is held that the appellant is eligible for carry forward of losses of Kovalam Hotel Ltd as per section 72A of the Income tax Act, 1961 and the ground of appeal of the appellant is allowed." 4. Before us the Ld. DR submitted that carry forward of the loss has been declined to M/s Kovalam Hotels Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hotels Ltd., a company in which public is not substantially interested, and therefore M/s Kovalam Hotels Ltd was a closely held company, prior to change of shareholdings during previous year 2005-06. The provisions of section 79 gets attracted on happening of this first event i.e. AY 2006-07. 7.1 The second event happened in assessment year 2007-08, which is corresponding to previous year 2006-07. By way of the order of the Hon'ble Bombay High Court, M/s Kovalam Hotels Ltd., amalgamated with the assessee company from the effective date as on 01/04/2006. So with effect from assessment year 2007-08, the said M/s Kovalam Hotels Ltd. became part of the assessee company. The provisions of section 72A of the Act gets attracted in the event of merger/amalgamated, therefore, in the case section 72A comes into picture only at the stage of second event i.e. AY 2007-08. 7.2 In the case of M/s Kovalam Hotels Ltd. for assessment year 2006-07, the assessee claimed carry forward of business loss of earlier years amounting to Rs.13,43,71,982/-. The year-wise details of such loss has been tabulated by the Ld. CIT(A) in para 5.3 of the impugned order. For ready reference, said detail is extracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable for carryforward to next assessment year i.e. AY 2007-08 because change in shareholding has happened or taken place in Kovalam Hotels Ltd., which was a closely held company and Kovalam Hotels Ltd. as company in which public are substantially interested is resultant company due to such change, therefore, provisions of section 79 are applicable over the facts of the case. 7.5 But the assessee in the year under consideration has claimed the set off of the said loss on the ground that M/s Kovalam Hotels Ltd. has been merged with the assessee company with effect from assessment year 2007-08. 7.6 In our opinion, once the Assessing Officer in the case of Kovalam Hotels Ltd for assessment year 2006-07 has already rejected claim of carry forward of the said business loss in terms of section 79 of the Act, then same cannot be available to the assessee for set off u/s 72A of the Act until and unless said finding of the Assessing Officer is reversed by the higher appellate authorities. The Ld. counsel of the assessee intimated that appeal against the order of the Assessing Officer in the case of Kovalam Hotels Ltd. for AY 2006-07 is pending before the Ld. First Appellate Authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
