DCIT,Circle-9, Kolkata, Kolkata V. M/s. Varshana Investment (P)Ltd, Kolkata

ITA 1148/KOL/2012

• Counselvise Citation: 114823514 RSA 2012
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR PANDE
• Assessee Lawyers: MANISH TIWARI
• Keywords: Depreciation; Corroborative evidences

Judgement Text

I.T.A. NO . 11 4 8 / KOL ./20 1 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA BEFORE SHRI P.K. BANSAL , ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH , JUDICIAL MEMBER I.T.A. NO. 11 4 8 / KOL / 20 1 2 ASSESSMENT YEAR : 200 7 - 20 0 8 DEPUTY COMMISSIONER OF INCOME TAX, ...... ......... ........ . APPELLANT CIRCLE - 9 , AAYAKAR BHAWAN, 5 TH FLOOR, P - 7, CHOWRINGHEE SQUARE, KOLKATA - 700 0 69 - VS. - M/S. VARSHANA INVESTMENT PVT. LIMITED, ...... .. ....... ..... . RESPONDE NT 11, WOODLANDS SYNDICATE, 8/7, ALIPORE ROAD, KOLKATA - 700 0 27 [PAN : AA BC V 0250 H ] APPEARANCES BY: SHRI ANIL KUMAR PANDE, JCIT, SR. D.R., FOR THE DEPARTMENT SHRI MANISH TIWARI, FCA , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JU LY 13 , 2 01 5 DATE OF PRONOUNCING THE ORDER : JU LY 27 , 201 5 O R D E R PER P.K. BANSAL : THIS A PPEAL HA S BEEN FILED BY THE REVENU E AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - VIII , KOLKATA D ATED 11 . 0 5 .20 1 2 FOR THE ASSESSMENT YEAR 200 7 - 0 8 BY TAKING THE FOLLOWING EFFECTIVE GROUND S OF APPEAL: - 1. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF CLAIM OF DEPRECIATION OF RS. 35,21,646/ - (I) RESIDENTIAL HOUSE PROPERTY AT 10, MISTRY MANOR, 62A, NAPEAN SEA ROAD, MUMBAI AND (II) PREMISES AT C - 6, CORIANTHIAN, 17 OFF ARTHUR BUN DER ROAD, COLABA, MUMBAI.' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN OBSERVING THAT THE HOUSE PROPERTY AT 10, MISTRY MANOR, 62A, NAPEAN SEA ROAD, MUMBAI AND HOUSE PROPERTY AT C - 6, CORIANTHIAN, 17 OFF ARTHUR BUNDER I.T.A. NO . 11 4 8 / KOL ./20 1 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 2 OF 9 ROAD, COLABA, MUMBAI WERE USED DURING THE PREVIOUS YEAR FOR BUSINESS ACTIVITY OF THE ASSESSEE COMPANY.' 3. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN OBSERVING THAT NO NOTIONAL ADDITION CAN BE MADE IN THE INCOME UNDE R THE HEAD INCOME FROM HOUSE PROPERTY IN RESPECT OF THE HOUSE PROPERTY 10, MISTRY MANOR, 62A, NAPEAN SEA ROAD, MUMBAI AND HOUSE PROPERTY AT C - 6, CORIANTHIAN, 17 OFF ARTHUR BUNDER ROAD, COLABA, MUMBAI, THE ABOVE HOUSE PROPERTIES HAVING BEEN USED DURING THE PREVIOUS YEAR FOR BUSINESS ACTIVITY OF THE ASSESSEE COMPANY.' 4. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE A.O. TO THE TUNE OF RS. 30,67,863/ - DISALLOWED U/S. 79 RELYING O N THE APEX COURT'S DECISION IN THE CASE OF CIT VS. ITALINDIA COTTONT CO. PVT. LTD. (1988) 174 ITR 160 WHERE IT WAS HELD THAT THE CHANGE IN SHAREHOLDING HAS TO EFFECTED WITH A VIEW TO AVOIDING OR REDUCING SOME LIABILITY TO TAX. THIS WAS PROVIDED IN THE THEN CLAUSE (B) OF SECTION 79 WHICH HAS SINCE BEEN OMITTED W.E.F. 01.04.89 AND HENCE THE ABOVE MENTIONED SUPREME COURT DECISION IS NO LONGER RELEVANT.' 2. GROUNDS NO. 1 & 2 RELATE TO THE DELETION OF THE DISALLOWANCE IN RESPECT OF THE DEPRECIATION. THE ASSE SSEE CLAIMED DEPRECIATION TOTALLING TO RS.35,39,663/ - , OUT OF WHICH DEPRECIATION ON BUILDING AMOUNTING TO RS.35,21,646/ - WAS DISALLOWED BY THE ASSESSING OFFICER. WHEN QUESTIONED, DURING THE COURSE OF ASSESSMENT THE ASSESSEE MADE A WRITTEN SUBMISSION STATIN G THAT THE ASSESSEE S PREMISES CONSIST OF TWO PROPERTIES ON WHICH DEPRECIATION WAS CLAIMED. THE FIRST PROPERTY IS SITUATED AT 10, MISTRY MANOR, 62A, NAPEAN SEA ROAD, MUMBAI, WHICH WAS ACQUIRED AND PUT TO USE ON 16.05.2006 FOR A TOTAL INVESTMENT OF RS.6,45, 89,190/ - . THE SAID PROPERTY WAS ALLOTTED TO MRS. ANITA KRISHNA IN HER CAPACITY AS DIRECTOR AND PERQUISITE VALUE IS DULY CONSIDERED IN HER INCOME - TAX RETURN. THE SECOND PROPERTY IS SITUATED AT NO. C - 6, CORIANTHIAN, 17 OFF ARTHUR BUNDER ROAD, COLABA, MUMBAI, WHICH WAS ACQUIRED AND PUT TO USE ON 15.01.2007 AS AN OFFICE OF THE ASSESSEE - COMPANY FOR TOTAL INVESTMENT OF RS.1,14,88,150/ - . THE ASSESSING OFFICER WAS NOT SATISFIED THAT THESE PROPERTIES HAD BEEN USED FOR BUSINESS PURPOSES AND ACCORDING TO HIM THE I.T.A. NO . 11 4 8 / KOL ./20 1 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 3 OF 9 ASSES SEE WAS ENGAGED IN TRADING IN SHARES AND MU TUAL FUNDS WERE EXECUTED THROUGH BROKER AND ALL CORRESPONDENCES IN THIS REGARD WERE MADE WITH THE COMPANY ADDRESSED AT INDIA LIMITED, BANDBOX HOUSE REAR, 2 ND FLOOR, AND 254D, DR. A.B. ROAD, WORLY, AND MUMBAI. THE RESIDENTIAL ADDRESS OF ONE OF THE MAIN ACTIVE DIRECTORS OF THE COMPANY MR. RAVI KRISHNA IS AT 6A, MAYFAIR GARDENS, LITTLE GIBBS ROAD, MALABAR HILL, MUMBAI - 6 AND SOME FINANCIAL TRANSACTIONS OF THE COMPANY RELATED TO INSURANCE AND BANK WERE EXECUTED FROM THI S ADDRESS. THE OTHER DIRECTOR OF THE COMPANY SMT. ANITA KRISHNA, WHO IS WIFE OF MR. RAVI KRISHNA HAS RESIDENTIAL A D DRE S S IN HER PERSONAL INCOME - TAX RETURN AT 11, WOODLAND SYNDICATE, 8/7, ALIPORE ROAD, KOLKATA - 27. THE ASSESSEE, THEREFORE, FAILED TO PRODUCE ANY SUPPORTING EVIDENCE THAT SMT. ANITA KRISHNA IS RESIDING AT THE PREMISE LOCATED AT 10, MISTRY MANOR, 62A, NAPEAN SEA ROAD, MUMBAI. ALL ADMINISTRATIVE EXPENSES DEBITED IN ITS PROFIT AND LOSS ACCOUNT RELATE TO THE REGISTERED OFFICE OF THE COMPANY AT KOLKA TA. THE ASSESSING OFFICER, THEREFORE, DISALLOWED THE DEPRECIATION. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(APPEALS). CIT(APPEALS) DELETED THE DISALLOWANCE IN RESPECT OF THE DEPRECIATION BY OBSERVING AS UNDER: - AFTER CAREFUL CONSIDERATION OF THE SUBMIS SION OF THE APPELLANT, PERUSING THE FACTS OF THE CASE INCLUDING THE IMPUGNED ASSESSMENT ORDER AND OTHER MATERIALS ON RECORD, THIS GROUND OF APPEAL OF THE APPELLANT IS DECIDED IN FAVOUR OF THE APPELLANT FOR THE UNDER MENTIONED REASONS IN RESPECT OF TWO DIFF ERENT PROPERTIES: RESIDENTIAL PROPERTY AT 10, MISTRY MANOR, 62A, NAPEAN SEA ROAD, MUMBAI IT IS NOT IN DISPUTE THAT THE SAID RESIDENTIAL PREMISES HAS BEEN ALLOTTED BY THE COMPANY TO ITS WHOLE TIME DIRECTOR SMT. ANITA KRISHNA (WHO IS RESIDING IN CALCUTTA) SO THAT SHE CAN LOOK AFTER BUSINESS ACTIVITY CARRIED ON BY THE APPELLANT COMPANY IN MUMBAI. I) IN THE CASE OF CIT VS. DELHI CLOTH AND GENERAL MILLS CO. LTD. (1966) 59 ITR 152 HAS HELD AS UNDER ON PAGE 155 OF THE REPORT: - 'THESE EMPLOYEES ARE ENGAGED I N THE MAIN BUSINESS OF THE COMPANY AND THEIR RESIDENCE IN THE BUILDINGS IN DISPUTE IS INCIDENTAL TO THEIR MAIN OCCUPATION, THAT IS, THE CARRYING ON OF THE BUSINESS OF THE COMPANY. IN TRUE PERSPECTIVE, THESE BUILDINGS ARE I.T.A. NO . 11 4 8 / KOL ./20 1 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 4 OF 9 PART OF THE BUSINESS EQUIPMENT OF T HE OWNER, OR, IN OTHER WORDS, IT IS THE BUSINESS ASSET OF THE OWNER'. SIMILAR VIEW HAS BEEN TAKEN IN FOLLOWING CASES: - J AMSHEDPUR ENGINEERING AND MACHINE MANUFACTURING CO. LTD. VS. CIT (1957) 32 ITR 41 (PAT) ; ROHTAS INDUSTRIES LTD. (1961) 41 ITR 524 (PAT) ; CIT VS. NATIONAL NEWSPRINT AND PAPER MILLS LTD. (1978) 114 ITR 388(MP) ; D.L.F. HOUSING & CONSTRUCTION P. LTD. VS. CIT (1983) 141 ITR 806 (DELHI). II) IN VIEW OF ABOVE DISCUSSED LEGAL AND FACTUAL POSITION I AM OF THE CONSIDERED VIEW THAT THE PR OPERTY SITUATED AT 10, MISTRY MANOR, 62A, NAPEAN SEA ROAD, MUMBAI IS USED FOR THE BUSINESS OF APPELLANT COMPANY AND IS ELIGIBLE FOR DEPRECIATION. ACCORDINGLY A.O. IS DIRECTED TO ALLOW DEPRECIATION ON THE SAID PROPERTY AS PER THE RATE PRESCRIBED UNDER INCOM E TAX RULES, 1962. OFFICE AT C - 6, CORIANTHIAN, 17 OFF ARTHUR BUNDER ROAD, COLABA, MUMBAI I) IT IS NOT IN DISPUTE THAT MAIN ACTIVE DIRECTOR OF THE COMPANY SHRI RAVI KRISHNA RESIDES IN MUMBAI AND SOME FINANCIAL TRANSACTION RELATING TO INSURANCE AND BANK ARE EXECUTED FROM HIS RESIDENTIAL HOUSE SITUATED IN MUMBAI . AS DISCUSSED ABOVE SMT ANITA KRISHNA THE OTHER DIRECTOR OF THE COMPANY HAS ALSO A PLACE TO RESIDE IN MUMBAI. II) IT IS ALSO NOT IN DISPUTE THAT IN ALL THE TRADING RELATED TO SHARES AND MUTUAL F UND THE MUMBAI ADDRESS OF 'BANDBOX HOUSE REAR, 2ND FLOOR AND 254 - D, DR. A. B. ROAD, WORLY MUMBAI' IS GIVEN. III) THE ABOVE FACTUAL POSITION SUPPORTS THE CONTENTION OF AIR THAT THE APPELLANT WAS IN NEED AN OFFICE IN MUMBAI AND FOR THIS PURPOSE THE APPELLAN T COMPANY HAS ACQUIRED THE PROPERTY SITUATED AT C - 6, CORIANTHIAN, 17 OFF ARTHUR BUNDER ROAD, COLABA, MUMBAI . IV) THE AIR SUBMISSION THAT THE COMPANY HAS USED THE PROPERTY FOR HOLDING BUSINESS MEETING ETC HAS NOT BEEN CONTROVERTED BY A.O. BY ANY MATERIAL EVIDENCE. V) THAT IN THE CASE OF ACIT VS. ASHINA SYNTEX LTD. 251 ITR 133, THE HON'BLE GAUHATI HAS HELD THAT THE EXPRESSION 'USED' FOR THE PURPOSE OF BUSINESS HAS A WIDER MEANING. THE LAW HAS NOT PRESCRIBED ANY MINIMUM TIME LIMIT FOR USE. III) FOR THE ABOVE REASONS I AM OF THE CONSIDERED VIEW THAT THE PROPERTY SITUATED AT C - 6, CORIANTHIAN, 17 OFF ARTHUR' 'BUNDER ROAD, COLABA, MUMBAI I.T.A. NO . 11 4 8 / KOL ./20 1 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 5 OF 9 IS USED FOR THE BUSINESS OF THE APPELLANT HENCE THE DEPRECIATION IS TO ALLOWED ON THIS PROPERTY. ACCORDINGLY A.O. IS DIREC TED TO ALLOW DEPRECIATION ON THE SAID PROPERTY AS PER THE RATE PRESCRIBED UNDER INCOME TAX RULES, 1962 . 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF TAX AUTHORITIES BELOW. LD. D.R. EVEN THOUGH VEHEMENT LY RELIED ON THE ORDER OF THE ASSESSING OFFICER BUT COULD NOT ADDUCE ANY COGENT MATERIAL OR EVIDENCE BEFORE US, WHICH MAY COMPEL US TO REVERSE THE FINDING OF THE CIT(APPEALS). IT IS NOT DENIED THAT THE PROPERTY NO. 10, MISTRY MANOR, 62A, NAPEAN SEA ROAD, M UMBAI WAS ALLOTTED TO SMT. ANITA KRISHNA, DIRECTOR SO THAT SHE CAN LOOK AFTER BUSINESS ACTIVITY CARRIED ON BY THE ASSESSEE - COMPANY IN MUMBAI. SIMILARLY IN RESPECT OF PROPERTY AT C - 6, CORIANTHIAN, 17 OFF ARTHUR BUNDER ROAD, COLABA, MUMBAI, NO EVIDENCE WAS B ROUGHT TO OUR KNOWLEDGE BY THE LD. D.R. WHICH MAY PROVE THAT THE ASSESSEE WAS NOT HAVING ITS OFFICE THERE. WE, ACCORDINGLY, DISMISS THE GROUNDS NO. 1 & 2 AND CONFIRM THE ORDER OF THE CIT(APPEALS). 4. GROUND NO. 3 RELATES TO THE DELETION OF THE ADDITION MA DE IN RESPECT OF THE AFORESAID TWO PROPERTIE S. 5. AFTER HEARING THE RIVAL SUBMISSIONS AND CONSIDERING THE MATERIAL AVAILABLE ON RECORD WE NOTED THAT THIS GROUND, IN OUR OPINION, IS CONSEQUENTIAL IN NATURE. SINCE WE HAVE ALREADY CONFIRMED THE ORDER OF CIT( APPEALS) THAT BOTH THE PROPERTIES ACQUIRED BY THE ASSESSEE DURING THE YEAR WERE BEING USE D FOR THE PURPOSE OF BUSINESS AND, THEREFORE, THE ASSESSEE WAS ENTITLED FOR THE DEPRECIATION, AND NO QUESTION OF ADDING ANNUAL VALUE AS INCOME FROM HOUSE PROPERTY UNDE R SECTION 22 ARISES. WE ACCORDINGLY DISMISS THIS GROUND. 6. GROUND NO. 4 RELATES TO THE DELETION OF THE ADDITION MADE TO THE TUNE OF RS.30,67,863/ - . THE FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE CLAIMED SET OFF OF THE PAST BUSINESS LOSSES FOR TH E ASSESSMENT I.T.A. NO . 11 4 8 / KOL ./20 1 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 6 OF 9 YEAR 2004 - 05 OF RS.30,67,863/ - AND FOR THE ASSESSMENT YEAR 2006 - 07 OF RS.19,36,402/ - . THE ASSESSING OFFICER ASKED FOR THE SHAREHOLDING OF THE ASSESSEE - COMPANY DURING THE ASSESSMENT YEAR, BUT WAS NOT SATISFIED WITH THE ASSESSEE RELATING TO THE SHAREHOLDING GIVEN BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2004 - 05. THE ASSESSING OFFICER NOTED FROM THE SHAREHOLDING PA TTERN THAT DURING THE FINANCIAL YEAR 2003 - 04 THERE WAS 10 OLD SHAREHOLDERS CARRYING 100% VOTING POWER. THE SAID SHAREHOLDERS ALSO CONTIN UED IN THE FINANCIAL YEAR 2004 - 05, BUT THERE VOTING POWER REDUCED TO 47.25% AS THERE WAS ALSO INCREASE OF 7 NEW SHAREHOLDERS CARRYING 52.75% VOTING POWER. THUS THE ASSESSING OFFICER WAS OF THE VIEW THAT DURING THE FINANCIAL YEAR 2004 - 05, THERE WAS CHANGE I N SHAREHOLDING. AS PER SECTION 79 OF THE INCOME TAX ACT, LOSS PERTAINS TO FINANCIAL YEAR 2003 - 04 RELEVANT TO ASSESSMENT YEAR 2004 - 05 AMOUNTING TO RS.30,67,863/ - IS NOT ALLOWABLE TO CARRY FORWARD AND SET OFF AGAINST THE INCOME FOR THE ASSESSMENT YEAR 2007 - 0 8 AS CLAIMED BY THE ASSESSEE. THEREFORE, HE DISALLOWED THE SAME. 7. BEFORE THE CIT(APPEALS), THE ASSESSEE SUBMITTED THAT DURING THE ASSESSMENT YEAR 2004 - 05, THE ISSUED AND SUBSCRIBED CAPITAL WAS 2,00,520 SHARES OF RS.10/ - EACH. THE ENTIRE CAPITAL OF RS.20 ,05,200/ - WAS HELD BY 10 SHAREHOLDERS. THE COMPANY INCREASED ITS SUBSCRIBED CAPITAL BY ISSUE OF FRESH SHARES IN SUBSEQUENT YEARS. THE FRESH SHARES WERE ALLOTTED TO NEW SHAREHOLDERS. ALL THE TEN OLD SHAREHOLDERS WHO HELD SHARES IN ASSESSMENT YEAR 2004 - 05 RE MAINED IN THE LIST OF SHAREHOLDERS. THE YEAR - WISE INCREASE OF SHARE CAPITAL AS WELL AS NEW AND OLD SHAREHOLDERS ARE HIGHLIGHTED BELOW: - NO. OF SHAREHOLDERS S HARE CAPITAL OLD NEW TOTAL F.Y. 2004 - 05 (A.Y. 2005 - 06) 10 07 17 45,65,200/ - F.Y. 2005 - 06 ( A.Y. 2006 - 07) 17 13 30 71,95,540/ - F.Y. 2006 - 07 (A.Y. 2007 - 08) 30 NIL 30 90,71,400/ - I.T.A. NO . 11 4 8 / KOL ./20 1 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 7 OF 9 IT WAS SUBMITTED THAT SECTION 79 IS APPLICABLE WHERE THERE IS A CHANGE IN THE SHAREHOLDING PATTERN IN THE CASE OF ASSESSEE. BUT THERE WAS NO CHANGE IN THE SHAREHOLDING PATTERN. THE OLD 10 SHAREHOLDERS WHO HELD THE ENTIRE SHARE CAPITAL AS ON 31.03.2004 CONTINUED TO HOLD THEIR SHARES ON 31.03.2007 CARRYING 51% OF VOTING POWER. ACCORDING TO THE ASSESSEE WHAT IT TO BE CONSIDERED IN THE SHAREHOLDING PATTERN FOR THE ASSESSMENT YEAR 2004 - 05 AND THE SHAREHOLDING PATTERN FOR THE ASSESSMENT YEAR 2007 - 08. THE SHAREHOLDING PATTERN FOR THE ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 CANNOT BE COMPARED. THE CIT(APPEALS) ULTIMATELY RELYING ON THE DECISION OF THE HON BLE SUPREME COURT IN THE CA SE OF CIT VS. - ITALINDIA COTTON CO. PVT. LIMITED REPORTED IN 174 ITR 160 AND THAT OF CIT VS. - SHRI SUBHULAXMI MILLS LIMITED REPORTED IN 249 ITR 795 DELETED THE DISALLOWANCE. ACCORDING TO HIM, THERE WAS NO CHANGE IN THE SHAREHOLDING PATTERN DUE TO INDUCTI ON OF FRESH CAPITAL IN THE COMPANY AND NOT DUE TO TRANSFER OF SHARES FROM ONE SHAREHOLDER TO ANOTHER. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME ALONG WITH THE ORDER OF TAX AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE PRO VISIONS OF SECTION 79. WE NOTED THAT DURING THE ASSESSMENT YEAR 2004 - 05, IN WHICH THE LOSS INCURRED WHICH THE ASSESSEE CLAIMED TO SET OFF DURING THE IMPUGNED ASSESSMENT YEAR. THE ASSESSEE S PAID UP SHARE CAPITAL WAS RS.20,05,200/ - AND THE ASSESSEE WAS HAVI NG 10 SHAREHOLDERS. SUBSEQUENTLY DURING THE ASSESSMENT YEAR 2005 - 06 THE ASSESSEE HAS ISSUED FRESH SHARES TO 7 NEW SHAREHOLDERS. WHEN THE ASSESSEE ISSUED, SUBSCRIBED CAPITAL INCREASED TO RS.45,65,200/ - . SIMILARLY IN THE ASSESSMENT YEAR 2006 - 07 THE ASSESSEE HAS ALSO ISSUED FRESH SHARES TO 13 NEW SHAREHOLDERS. WHEN ISSUED, SUBSCRIBED CAPITAL INCREASED TO RS.71,95,540/ - . THERE IS NO CHANGE SO FAR THE SHARES BEING HELD BY THE SHAREHOLDERS AS ON 31.03.2004. THE SAME VERY SHAREHOLDERS HOLDING THE SAME CAPITAL OF R S.20,05,200/ - . THE PROVISION OF SECTION 79 LAYS DOWN AS UNDER: - 79. NOTWITHSTANDING ANYTHING CONTAINED IN THIS CHAPTER, WHERE A CHANGE IN BEING A COMPANY IN WHICH THE PUBLIC ARE I.T.A. NO . 11 4 8 / KOL ./20 1 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 8 OF 9 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 51% OF THE VOTING POWER WERE BENEFICIALLY HELD BY PERSONS WHO BENEFICIALLY HELD SHARES OF THE COMPANY CARRYING NOT LESS THAN 51% OF THE VOTING POWER ON THE LAST DAY OF THE YEAR OR YEARS IN WHICH THE LOSS WAS INCURRED FROM THE READING OF THIS SECTION, IT IS APPARENT THAT THE PROVISIONS OF SECTION 79 ARE APPLICABLE WHERE THERE IS A CH ANGE ON THE LAST DAY OF THE PREVIOUS YEAR THE SHARES OF THE COMPANY CARRYING NOT LESS THAN 51% OF THE VOTING POWER WERE BENEFICIALLY HELD BY THE PERSONS WHO BENEFICIALLY HELD SHARES OF THE COMPANY NOT LESS THAN 51% OF THE VOTING POWER ON THE LAST DATE OF T HE YEAR OR YEARS IN WHICH THE LOSS W A S INCURRED. THE PREAMBLE OF THIS SECTION REQUIRES THAT THERE MUST BE A CHANGE IN THE SHAREHOLDING. IN THE CASE OF THE ASSESSEE, WE NOTED THAT THERE IS NO CHANGE IN THE SHAREHOLDING PATTERN, THE OLD 10 SHAREHOLDERS, WHO WERE HAVING THE ENTIRE SHARE CAPITAL AS ON 31.03.2004 CONTINUES TO HOLD THE SHARES AS ON 31.03.2007. IN THE CASE OF THE ASSESSEE THE CHANGE IN THE SHAREHOLDING PATTERN IS DUE TO THE INDUCTION OF THE FRESH CAPITAL NOT DUE TO THE TRANSFER OF THE SHARES FROM ONE SHAREHOLDER TO ANOTHER. IN VIEW OF THIS FACT, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER OF THE CIT(APPEALS). WE ACCORDINGLY CONFIRM THE ORDER OF THE CIT(APPEALS) DIRECTING THE ASSESSING OFFICER TO ALLOW THE SET OFF OF BROUGHT FORWARD LOSS FROM THE ASSESSMENT YEAR 2004 - 05. THUS THIS GROUND ALSO STANDS DISMISSED. 9 . IN THE RESULT, THE APPEAL FILED BY THE REVENU E STAND S DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON JU LY 27 , 201 5 . SD/ - SD/ - MAHAVIR SINGH P.K. BAN SAL ( JUDICIAL MEMBER) ( ACCOUNTANT MEMBER) KOLKATA, THE 27 TH D AY OF JU LY , 201 5 COPIES TO : (1) DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 9, AAYAKAR BHAWAN, 5 TH FLOOR, P - 7, CHOWRINGHEE SQUARE, KOLKATA - 700 069 I.T.A. NO . 11 4 8 / KOL ./20 1 2 ASSESSMENT YEAR: 200 7 - 20 0 8 PAGE 9 OF 9 (2) M/S. VARSHANA INVESTMENT PVT. LIMITED, 11, WOODLANDS SYNDICATE, 8/7, ALIPORE ROAD, KOLKATA - 700 027 (3) COMMISSIONER OF INCOME - TAX (APPEALS) (4) COMMISSIONER OF INCOME TAX ( 5 ) THE DEPARTMENTAL REPRESENTATIVE ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA B ENCHES, KOLKATA LAHA/SR. P.S .