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TMI Blog2022 (2) TMI 1325X X X X Extracts X X X X X X X X Extracts X X X X ..... that ultimate holding company was the beneficial shareholder in the Assessee company having more than 51% or more voting right. Thus it is well settled proposition that registered shareholder is beneficial owner of shares, unless such shares are held in the capacity of a nominee/agent/trustee of the real owner which is not the case here. Accordingly, the order of the ld. CIT (A) is confirmed and the same is based on correct appreciation of facts and law. Ground No.1 in both the years is determined against the Revenue. Disallowance on account of club expenditure - AO has disallowed amount in the name of the Director considering the said expenses personal in nature - HELD THAT:- CIT (A), after referring to various decisions, held that expenses in relation to club fee are to be treated as business of the assessee and an allowable expenditure. We do not find any infirmity in such finding and the same is confirmed. Ground No.2 of AY 2014-15 is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... ingdom, for an amount of £ 4.35 per share for a total value of £ 277.7($437.6). This merger created a professional services firm with approximately 15,000 employees, working in over 300 offices worldwide. The total value of the transaction was $437.6 million, achieved principally through a private placement and a public offering of $ 422.1 million." 6. Thus, he noted that losses pertained to FY 2011-12 and as on 31.03.2012, the ultimate holding company was WSP Group Plc, UK which continued to be so upto July 31,2012; and thereafter w.e.f. 0108.2012, all shares of WSP Group Plc. UK were acquired by Genevar Inc. Canada which later on reorganized as WSP Global Inc. Thus, he held that on 31.03.2013, shares of the company carrying less than fifty-one percent of the voting power are beneficially held by WSP Global Inc., Canada who did not beneficially hold shares of the company carrying not less than fifty one percent of the voting power as on 31.03.2012 in which loss was incurred. The relevant portion of which reads as under :- "79. Carry forward and set off of losses in the case of certain companies : Notwithstanding anything contained in this chapter, where a chang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial precedents, the shares beneficially held by the shareholder implies the registered shareholder of the company, unless the registered shareholder is holding shares merely in the capacity of a nominee/ agent/ trustee. It is well settled by the courts in India in case of multilayer structures, the shares held by immediate holding company is the shares held by immediate holding company beneficially and other intermediary holding company or ultimate holding company cannot be treated as holding shares in the first subsidiary company. Therefore, section 79 can be invoked only if there is a change in shareholding of the Appellant company. 5.8 In the facts of this case there is no change in the shareholding of the appellant company i.e. WSP Cyprus. The Appellant company continues to be the wholly owned subsidiary of WSP Cyprus which is the registered and beneficial owner of shares in AY 2012-13 (i.e. the year in which loss was incurred). The ultimate holding company of the group, WSP UK has become intermediate holding company and WSP Canada became ultimate holding company with effect from 1 August 2012. But this does not affect the shareholding of WSP Cyprus in the Appellant comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merits. 5.12 In view of the fact of the case vis-a-vis provision of the Act and judicial precedents by jurisdictional High Court of Delhi in the case of Yum restaurants India Pvt. Ltd (supra) and of the Tribunals noted above, the addition made by the AO in impugned order amounting to INR 2,06,23,904/- is directed to be deleted and allow the Appellant to carry forward and set-off the losses of AY 2012-13." 8. We have heard both the parties at length and the relevant finding given in the impugned order as well as the documents referred to at the time of hearing. Before us, ld. counsel for the assessee has made rebuttal of observations made by the AO in the assessment order in the following manner :- S.No. Observations of the AO in the assessment order Rebuttal/Submission of the company 1. Disclosure made in the TAR of AY 2014-15 at Clause 32(b) (refer page 76 of paperbook for AY 2014-15), wherein against the change in shareholding of the company during previous Year - 'Yes' was mentioned Pursuant to the order of Hon'ble High Court dated 30 May 2014, WSP Engineering Services Ltd. ('WSP Engineering'), was merged with the WSP CIL with effect from 1 April 2013. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany, as WSP Cyprus (i.e. immediate holding company) continuously held 99.99% shares in WSP CIL in the year of incurrence of loss (i.e. AY 2012-13) and as on the last date of previous year relevant to the Assessment Year 2014-15. Accordingly, the provisions of section 79 of the Act are not applicable in the case of WSP CIL. There was a change in ultimate holding company (i.e. WSP Group Plc, U.K. (upto July 31, 2012) and WSP Global Inc., Canada, with effect from 1 August 2012). However, there was no change in the immediate holding company, namely - WSP Group Cyprus Limited ('WSP Cyprus'). Basis the ratio emerging from various judicial precedents discussed below, it can be concluded that the provisions of section 79 of the Act can be invoked only in case there is change in immediate shareholding, as against the contention of the ld. AO where section 79 has been invoked due to change in ultimate Holding Company of the Assessee company. 3. Details obtained from annual reports of the group companies obtained from public domain. Based on the information available on public domain, the ld. AO assumed that there was a change in shareholding of the company and invoked section 79 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said to be holding shares in the company where the subsidiary of such intermediate holding company or ultimate holding is the shareholder. 11. The aforesaid ratio is squarely applicable on the facts of the case which are as under :- * There is no change in the shareholding of the Assessee company, i.e. WSP Cyprus held 99.99 percent shares in the Assessee company; * WSP Cyprus was the registered and beneficial shareholder of the Assessee company in AY 2012-13 (i.e. the year in which loss was incurred) and in AY 2013-14 & AY 2014-15 (i.e. the years in which such loss was set-off); * Change in ultimate holding company from WSP UK (upto 31 July 2012) to WSP Canada (from 1 August 2012) does not affect the shareholding of WSP Cyprus in the Assessee company; * There is nothing on record which could indicate that ultimate holding company was the beneficial shareholder in the Assessee company having more than 51% or more voting right. 12. Apart from that, it is well settled proposition that registered shareholder is beneficial owner of shares, unless such shares are held in the capacity of a nominee/agent/trustee of the real owner which is not the case here. Accordingly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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