[aaykarbhavan] S. 79: Imp Verdict On Lapse Of Loss Due To Change Of Shareholding

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

CIT vs. AMCO Power Systems Ltd (Karnataka High Court)

S. 79: As the purpose of the provision is to prevent misuse of losses by transferring ownership, it should be restricted to cases of transfer of 'beneficial shareholding'. A transfer of shares of the loss-making company by the shareholder-company to its subsidiary is not hit by s. 79

The purpose of Section 79 of the Act would be that benefit of carry forward and set-off of business losses for previous years of a company should not be misused by any new owner, who may purchase the shares of the Company, only to get the benefit of set-off of business losses of the previous years, which may bear profits in the subsequent years after the new owner takes over the Company. For such purpose, it is provided under the said Section that 51% of the voting power which was beneficially held by a person or persons should continue to be held, then only such benefit could be given to the Company

Regards,

 

Editor,

 

itatonline.org

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Posted by: "editor@itatonline.org" <itatonline.org@gmail.com>

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