ASTER RAIL PRIVATE LIMITED ,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX , CIRCLE-1(1), HYDERABAD

Brief facts of the case are that the assessee M/s Aster Rail Private Ltd., is engaged in the business of designing, manufacturing, erecting,

Aggrieved by such an act of the learned Assessing Officer, assessee preferred appeal and pleaded that they change in the shareholding took place pursuant to the agreement dated 30/07/2013, the payment in respect of which was made in the month of August 2013 and, therefore, only the brought forward losses are not entitled to be carried forward in the case of changes in the shareholding but not the current year losses. Ld. CIT(A), however, observed that the entire process of transition was complete during the previous year relevant to the assessment year 2014- 15 and, therefore, the stand taken by the learned Assessing Officer in making disallowance of the losses for the assessment year 2014-15 was correct. On this premise, Ld. CIT(A) dismissed the appeal of the assessee.

Aggrieved by the order of the Ld. CIT(A), assessee preferred this appeal stating that the application of the provisions of section 79 of the Act is improper to the current year losses, inasmuch as the project itself clearly states that no loss incurred in any year prior to the previous year in which the change in the shareholding took place shall be carried forward and set off against the income of the previous year. According to the Ld.

Ld. DR placing reliance on the orders of the authorities below and argued on the lines of reasoning given by them.

We have gone through the record in the light of the submissions made on either side. Insofar as the fact of change in shareholding is concerned, absolutely there is no dispute that such exchange took place pursuant to the share purchase agreement dated 30/07/2013. It means as on 31/03/2014 the holding company, namely, M/s. NCC Ltd. acquired hundred percent stake in the assessee company. As on 31/03/2014, there was a loss to the tune of Rs. 1,99,32,403/-.

Section 79 of the Act reads that where a change in shareholding has taken place in any 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, but subject to certain conditions. Here in this case the previous year is 2013-14 and the relevant assessment year is 2014-15. With reference to these, the losses that are not allowable to be carried forward to be set off against the income of the assessment year 2014-15 or the losses relating to the period prior to the assessment year 2014-15. It means that any loss that is coming from the assessment year 2013-14 is not allowable against the income of the assessment year 2014-15. This does not mean that the losses incurred during the

In the result, appeal of the assessee is allowed.