M/s Portside Estates Ltd., Kolkata V. ACIT, CIR-5, KOLKATA, Kolkata

ITA 1150/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4577 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 3 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 25-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2014
• Court: TRIBUNAL
• Department Lawyers: SITAL CHANDRA DAS
• Keywords: Gift; Business income; Business expenditure; Wholly owned subsidiary; Revenue expenditure; Capital expenditure
• Section: 143(3); 115JB

Judgement Text

ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM ] I.T.A NO.1150/KOL/201 4 ASSESSMENT YEAR : 2007- 08 M/S.PORTSIDE ESTATES LTD., -VS.- A.C.I.T. , CIRCLE-5, KOLKATA KOLKATA (PAN:AABCP 4832 D)) (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI RAVI TULSIYAN, FCA FOR THE RESPONDENT : SHRI SITAL CHANDRA DAS , JCIT DATE OF HEARING : 25.08.2016. DATE OF PRONOUNCEMENT : 02.09.2016. ORDER THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 06.03.2014 OF CIT(A)-VI, KOLKATA, RELATING TO AY 2007-08. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND TRADING IN GOODS, MERCHANDISE AND SECURITIES. T HE ASSESSED FILED RETURN OF INCOME FOR A.Y.2007-08 DECLARING TOTAL INCOME OF RS.16,83, 700/- UNDER THE NORMAL PROVISION OF INCOME TAX ACT, 1961 (ACT) AND RS.19,89,206/- BE ING BOOK PROFITS U/S 115JB OF THE ACT. ARRIVING AT THE TOTAL INCOME WHICH COMPRISED O NLY THE INCOME UNDER THE HEAD INCOME FROM BUSINESS THE ASSESSEE HAD SET OFF BROUG HT FORWARD LOSS OF RS.3,81,937/-. THE CLAIM FOR SUCH SET OFF WAS DISALLOWED BY AO FOR THE FOLLOWING REASONS :- 2. SET-OFF BROUGHT FORWARD LOSSES : THE AO WHILE FINALIZING THE ASSESSMENT ORDER U/S 14 3(3) FOR THE ASSESSMENT YEARS 2005- 06 AND 2006-07 HAS NOT ALLOWED THE ASSESSEE FOR CAR RY FORWARD OF LOSSES PRIOR TO 31.03.2005 AS THERE WAS A CHANGE IN THE SHARE HOLDI NG PATTERN. AS PER SECTION 79 OF THE I.T.ACT, 1961, IF THERE IS CHANGE IN SHARE HOLDING PATTERN MORE THAN 51% OF THE AMALGAMATING COMPANY, THEN LOSSES ARE NOT ALLOWED T O BE CARRIED FORWARD. FOLLOWING THE DECISION OF AO FOR ASSESSMENT YEARS 2 005-06 AND 2006-07 WHERE THIS ISSUE HAS BEEN DEALT IN DETAIL, THE ASSESSEE IS NOT ALLOWED TO SET OFF ANY LOSS, PRIOR TO 31.03.2005 WITH INCOME EARNED AFTER THAT. ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 2 3. ON APPEAL BY ASSESSEE CIT(A) CONFIRMED THE ORDER OF AO BY FOLLOWING HIS PREDECESSOR IN ASSESSEES OWN CASE ON AN IDENTICAL ISSUE FOR A.Y.2006-07. 4. BEFORE ME, THE ASSESSEE POINTED OUT THAT FOR A.Y.2 005-06 AND 2006-07 FOR IDENTICAL REASONS THE SETTING OFF OF BROUGHT FORWAR D LOSS WAS NOT ALLOWED BY THE AO WHILE CONCLUDING THE ASSESSMENT OF THE ASSESSEE FOR A.Y.2005-06 AND 2006-07 AND ULTIMATELY THE TRIBUNAL IN ITA NOS.1673/KOL/2011 AN D 182/KOL/2012 FOR A.Y.2005- 06 AND 2006-07 BY ORDER DATED 07.04.2014 HAD ALLOWE D THE CLAIM OF THE ASSESSEE. 5. THE FOLLOWING ARE THE RELEVANT FINDINGS OF THE TRI BUNAL :- 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT FOR THE RE LEVANT ASSESSMENT YEAR 2005-06, ASSESSMENT WAS FRAMED U/S. 143(3) OF THE ACT. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTICED FROM THE ACCOUNTS FILED ALO NG WITH THE RETURN OF INCOME THAT ASSESSEE HAD CLAIMED CARRY FORWARD OF FOLLOWING LOS SES INCURRED IN DIFFERENT YEARS: AY LOSS UNDER THE HEAD AMOUNT 2000-01 BUSINESS RS.10,96,105/- 2001-02 -DO- RS.31,82,935/- 2002-03 -DO- RS. 8,160/- 2003-04 -DO- RS. 10,150/ 2004-05 -DO- RS. 11,460/- RS.43,08,810/- THE AO WHEN SCRUTINIZED THE ACCOUNTS FOUND THAT THE SHAREHOLDING OF THE COMPANY HAS BEEN CHANGED DURING THE PREVIOUS YEAR AND PUBLIC AR E NOT SUBSTANTIALLY INTERESTED IN THE COMPANY AND THEREFOR ISSUED SHOW CAUSE NOTICE TO TH E ASSESSEE TO EXPLAIN AS TO WHY THIS CLAIM OF CARRY FORWARD LOSSES SHOULD NOT BE DISALLO WED. THE ASSESSEE FILED SUBMISSIONS BEFORE THE AO BUT AO DISALLOWED THE CARRY FORWARD L OSSES BY STATING THAT DURING THE PREVIOUS YEAR RELEVANT TO THIS ASSESSMENT YEAR, THE ASSESSEE COMPANY IS NOT A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. AGGR IEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 3.FIRST OF ALL, WE HAVE TO DISCUSS THE BARE FACTS O F THE ASSESSEE COMPANY. THE SHAREHOLDING PATTERN OF THE ASSESSEE COMPANY PORTSI DE ESTATES LTD. IS AS UNDER: SL. NO. SHAREHOLDERS NAME FOLIO NO. NOS. % OF TOTAL 1 2 3 4 5 6 7 8 MR. M.K. JALAN & KEVENTER PROJECTS LTD. MRS. S.P. JALAN & KEVENTER PROJECTS LTD. MR. MAYANK JALAN & KEVENTER PROJECTS MR. RATANLAL SETHIA & KEVENTER PROJECTS LTD. MR. SANJAY GUPTA & KEVENTER PROJECTS MR. RADHE SHYAM KHETAN & KEVENTER PROJECTS LTD. KEVENTER PROJECTS LTD. MANOHARLAL PHOOLCHAND KANUNGO 25 26 27 28 29 30 31 32 10 10 10 10 10 10 6,517,940 725,000 0% 0% 0% 0% 0% 0% 90% 10% ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 3 TOTAL : 7,243,000 100% FROM THE ABOVE, IT IS SEEN THAT THE ASSESSEE HAS O NLY EIGHT SHAREHOLDERS OUT OF WHICH SIX SHAREHOLDERS ARE HAVING ONLY 10 SHARES EACH OUT OF TOTAL SHARES OF 72.43 LAKHS. IT IS SEEN THAT 90% OF HOLDING IS WITH KEVENTER PROJECTS LTD. IN THE SHAREHOLDING PATTERN OF THE ASSESSEE COMPANY. NOW, WE HAVE TO SEE THE HOLDING COMPANY OF THE ASSESSEE KEVENTER PROJECTS LTD. WHICH HAS FIVE COMPANIES, THEIR JOINT LY SHAREHOLDING IS AT 50.002% AND DETAILS ARE AS UNDER: SL. NO. NAME OF LISTED COMPANIES NOS. % 1 2 3 4 5 M/S. MKJ ENTERPRISES LIMITED M/S. THE RIGHT ADDRESS LIMITED M/S. MKJ DEVELOPERS LIMITED M/S. MADANLAL LIMITED M/S. TWENTY FIRST CENTURY SECURITIES LTD. SHARES HELD BY LISTED COS. 125,030 125020 125,020 125,020 30 500,120 12.5005% 12.4995% 12.4995% 12.4995% 0.0030% 50.002% AS NARRATED ABOVE, THE ASSESSEE CLAIMED CARRIED FOR WARD AND BROUGHT FORWARD LOSSES PERTAINING TO PREVIOUS YEARS AMOUNTING TO RS.43,08, 810/- AND AO DISALLOWED THE SAME AS THE ASSESSEE IS A COMPANY, ACCORDING TO HIM, IN WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED. THE AO REACHED TO THIS CONCLUSION FOR V ARIOUS REASONS AS NARRATED BY HIM MAINLY ON ACCOUNT OF LACK OF EVIDENCE BEING FILED B Y ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS IN SUPPORT OF ITS CLAIM THAT FIVE COMPANIES WHICH WERE ACTUALLY HOLDING 50.0020 SHARES OF KEVENTER PROJECTS LTD. AR E NOT THE COMPANIES IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. FURTHER, THE ALLEGAT ION OF THE AO IS THAT THE ASSESSEE FAILED TO ESTABLISH THAT 89.9895% OF ITS SHARES WERE ACQUI RED UNCONDITIONALLY BY KEVENTER PROJECTS LTD. NOW BEFORE US, LD. SR. DR SMT. SUCHE TA CHATTOPADHYAY, JCIT HEAVILY RELIED ON THE ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A). ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SHRI RAVI TULSIYAN ARGUED FOR ASSESSEE COMPANY AND FILED PAPER BOOK CONSISTS OF PAGES 1 TO 49. LD. COUNSEL ALSO STATED THAT ALL THE DOCUMENTS WERE FILED BEFORE THE LOWER AUTHORITIES. 5. FROM THE FACTS NARRATED BY BOTH THE SIDES IT IS SEEN THAT PRIOR TO 28.09.2004 ASSESSEE COMPANY WAS WHOLLY OWNED SUBSIDIARY OF WILIAMSON MA GOR & CO. LTD., REGISTERED OFFICE AT 4, MANGOE LANE, KOLKATA AND ASSESSEE HAS FILED THE EXTRACT OF ANNUAL REPORT OF WILLIAMSON MAGOR & CO. LTD. FOR FY 2002-03 AND 2003 -04 IN ASSESSEES PAPER BOOK AT PAGES 32-39. THIS CLEARLY SHOWS THAT THE ASSESSEE WAS A 100% SUBSIDIARY OF THE AFORESAID COMPANY DURING THOSE YEARS. THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO THE EXTRACT OF ANNUAL REPORT ENCLOSED AT ASSESSEES PAPER BOOK PAGES 32 TO 39, WHEREIN IT IS CLEAR THAT THE SHARES OF WILLIAMSON MAGOR & C O. LTD. ARE LISTED IN VARIOUS STOCK EXCHANGES I.E. CALCUTTA STOCK EXCHANGE VIDE STOCK C ODE NO.33013, GUWAHATI STOCK EXCHANGE VIDE STOCK CODE NO.L/558, MUMBAI STOCK EXC HANGE VIDE STOCK CODE NO.519224 AND NATIONAL STOCK EXCHANGE. IT MEANS TH AT PRIOR TO 28.09.2004 ASSESSEE WAS 100% SUBSIDIARY OF WILLIAMSON MAGOR & CO. LTD., A COMPANY LISTED AND ALSO WIDELY HELD COMPANY I.E. A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED IN TERMS OF SECTION 2(18)(B)(A) OF THE ACT. IT CONCLU DES THAT PRIOR TO 28.09.2004, THE ASSESSEE COMPANY WAS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. ON 28.09.2004, THE SHAREHOLDING OF THE ASSESSEE COMPAN Y WAS PURCHASED BY KEVENTER PROJECTS LTD. TO THE EXTENT OF 89.99% I.E. MORE THA T 50% SHARES. FROM THE ABOVE CHART REPRODUCED, IT IS CLEAR THAT MORE THAN 50% SHARES O F KEVENTER PROJECTS LTD. ARE HELD BY ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 4 FIVE COMPANIES. THE ASSESSEE HAS ENCLOSED A LIST A T PAGE 2 OF THE PAPER BOOK SHOWING THE SHAREHOLDING PATTERN OF KEVENTER PROJECTS LTD. , WHEREIN IT IS STATED THAT ALL THE FIVE COMPANIES ARE QUOTED WITH THE FOLLOWING STOCK EXCHA NGES: NAME OF LISTED COMPANIES QUOTED WITH STOCK EXCHANGE I) MKJ ENTERPRISES LTD. CALCUTTA & UTTAR PRADESH II)THE RIGHT ADDRESS LIMITED CALCUTTA III)MKJ DEVELOPERS LTD. CALCUTTA & UTTAR PRADESH IV)MADANLAL LIMITED CALCUTTA & GUWAHATI V) TWENTY FIRST CENTURY SECURITIES LTD. DELHI & UT TAR PRADESH THESE DETAILS IN RESPECT TO MARKET QUOTATION OF THE AFORESAID FIVE COMPANIES AT THE RELEVANT STOCK EXCHANGES AS ON 31.03.2005 ARE ENCLO SED AT PAGES 8 TO 14 OF ASSESSEES PAPER BOOK. IT MEANS THAT THE AFORESAID FIVE COMPAN IES ARE LISTED COMPANIES WITH THE STOCK EXCHANGES AS NARRATED ABOVE AS REQUIRED U/S. 2(18)(B)(C) OF THE ACT AND, THEREFORE, IT WAS ARGUED ON BEHALF OF ASSESSEE THAT THEY ARE WIDELY HELD COMPANIES ON WHICH SECTION 2(18)(B) OF THE ACT IS APPLICABLE. S INCE MORE THAN 50, EXACT 50.0020% SHAREHOLDING OF KEVENTER PROJECTS LTD. ARE HELD BY AFORESAID FIVE COMPANIES, COMPANIES IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED, IT WA S ARGUED, THAT KEVENTER PROJECTS LTD. IS ALSO A WIDELY HELD COMPANY TO WHICH SECTION 2(18 )(B) IS APPLICABLE. ONCE THIS IS THE POSITION, WHETHER THE ASSESSEE COMPANY, WHOSE SHARE S, MORE THAN 50% WERE HELD BY KEVENTER PROJECTS LTD., THE ASSESSEE COMPANY CAN BE HELD TO BE A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED OR IT CAN BE CO NCLUDED THAT THE ASSESSEE IS A WIDELY HELD COMPANY IN TERMS OF SECTION 2(18)(B) OF THE AC T OR NOT. 6. WE HAVE GONE THROUGH THE ORDER OF CIT(A) AND FIN D THAT THE CIT(A) UPHELD THE ACTION OF AO BY OBSERVING AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND SUBMISSIONS OF THE ASSESSEE DA TED 16.12.2008 AND 28.6.2001. THE ASSESSING OFFICER HAS HELD THAT THERE A CHANGE IN T HE SHARE HOLDING FOR MORE THAN 51% OF THE COMPANY DURING THE PREVIOUS YEAR AND THE PUB LIC ARE NOT SUBSTANTIALLY INTERESTED IN THE COMPANY. HE FURTHER HELD THAT AS PER SECTION 2(18)(B)(B)(C) THE ASSESSEE COMPANY CANNOT BE HELD AS A COMPANY IN WHICH THE PU BLIC ARE SUBSTANTALLY INTERESTED. THE ASSESSEE WAS A WHOLLY OWNED SUBSIDARY OF M/S W ILLIAMSON MAGOR & COMPANY LTD., KOLKATA. THERE WAS A CHANGE IN THE SHARE HOLD ING ON 28.9.2004 AND MAJOR SHARE HOLDING (90%) OF THE ASSESSEE WAS PURCHASED BY M/S KEVENTER PROJECTS LTD WHICH WAS NOT A LISTED COMPANY. HOWEVER, AS PER THE ASSESSEE THE SHARES OF M/S KEVENTER PROJECTS LTD ARE HELD BY 11 PERSONS OUT OF WHOM FOLLOWING SH ARE HOLDING COMPANIES ARE CLAIMED TO BE LISTED COMPANY. SL. NO. NAME OF LISTED COMPANIES NOS. % 1 2 3 4 5 M/S. MKJ ENTERPRISES LIMITED M/S. THE RIGHT ADDRESS LIMITED M/S. MKJ DEVELOPERS LIMITED M/S. MADANLAL LIMITED M/S. TWENTY FIRST CENTURY SECURITIES LTD. SHARES HLED BY LISTED COS. 125,030 125020 125,020 125,020 30 500,120 12.5005% 12.4995% 12.4995% 12.4995% 0.0030% 50.002% 5. M/S WILLIAMSON MAGOR & CO. WAS A LISTED COMPANY WHILE M/S KEVENTER PROJECTS LTD. IS NOT A LISTED COMPANY. TWENTY FIRST CENTURY SECURITIES LTD. WHICH IS ONE OF THE SHARE HOLDING COMPANY AND IS TAKEN AS LISTED COMPAN Y IS HOLDING ONLY 30 SHARES OUT OF ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 5 10,00,200 SHARES. NONE OF THE 5 CLAIMED LISTED COMP ANY IS LISTED EITHER IN BOMBAY STOCK EXCHANGE OR NATIONAL STOCK EXCHANGE WHILE M/S WILLIAM MAGOR & CO. WAS LISTED COMPANY AT BOTH BOMBAY STOCK EXCHANGE AND NA TIONAL STOCK EXCHANGE. THE ASSESSEE HAS NO WHERE PRODUCED THE EVIDENCE THAT TH E SHARES OF THESE FIVE (5) LISTED COMPANIES WERE BEING QUOTED IN THE CASH SECTION IN ROUTINE, THERE WERE ANY FLUCTUATIONS IN THE PRICE OF SHARES, SALE/PURCHASE TRANSACTIONS WERE BEING ENTERED FREQUENTLY AND/OR REPORTED IN THE STOCK EXCHANGE RE GULARLY ON DAILY/WEEKLY BASIS OR PERIODICALLY ETC. 6. THE SHARE HOLDING OF M/S PORTSDE ESTATES LIMITE D I.E. APPELLANT IS AS FOLLOWS: SL. NO. SHAREHOLDERS NAME FOLIO NO. NOS. % OF TOTAL 1 2 3 4 5 6 7 8 MR. M.K. JALAN & KEVENTER PROJECTS LTD. MRS. S.P. JALAN & KEVENTER PROJECTS LTD. MR. MAYANK JALAN & KEVENTER PROJECTS MR. RATANLAL SETHIA & KEVENTER PROJECTS LTD. MR. SANJAY GUPTA & KEVENTER PROJECTS MR. RADHE SHYAM KHETAN & KEVENTER PROJECTS LTD. KEVENTER PROJECTS LTD. MANOHARLAL PHOOLCHAND KANUNGO TOTAL : 25 26 27 28 29 30 31 32 10 10 10 10 10 10 6,517,940 725,000 7,243,000 0% 0% 0% 0% 0% 0% 90% 10% 100% 7. M/S PORTSIDE ESTATES LIMITED HAS ONLY 8 SHARE-H OLDERS OUT OF WHICH 6 SHARE HOLDERS HAVE ONLY 10 SHARES EACH OUT OF A TOTAL 72,43,000 S HARES. THE ASSESSEE IS A SUBSDIARY COMPANY OF A COMPANY, WHICH IS ALSO NOT LISTED. FUR THER, THE HOLDING COMPANY OF THE ASSESSEE I.E. M/S KEVENTER PROJECTS LTD. HAS 5 (FIV E) COMPANIES WHO JOINTLY HOLDS 50.002% SHARE HOLDING AND ARE CLAIMED TO BE LISTED IN STOCK EXCHANGE(S). THE LAW PROVIDED IN SEC 2(18)(B)(B)(C) DOES NOT APPLY AS TH E ASSESSEE DOES NOT HAVE A SUBSIDIARY COMPANY WHICH IS A LISTED COMPANY. IT IS CLARIFIED THAT THERE IS NO SUBSIDIARY COMPANY OF M/S PORTSIDE ESTATES LIMITED WHICH IS LI STED. THE ASSESSEE ITSELF IS A SUBSDIARY COMPANY OF M/S KEVENTER PROJECTS LTD. WH ICH IS ALSO NOT A LSTED COMPANY. WHILE M/S KEVENTER PROJECTS LIMITED HAS 11 SHARE HO LDERS WITH NONE OF THEM HAVING EVEN 13% SHARE HOLDING. THE SECTION 2(18)(B)(B)(C) PROVIDES EXCEPTION ONLY FOR ANY COMPANY AND NOT GROUP OF COMPANIES IN AGGREGATE/COM BINATION TO HOLD MORE THAN 50% SHARES AS LISTED HOLDING COMPANY(IES). THIS CHA IN CANNOT GO ON TILL AT LAST SOME COMPANIES AS A GROUP ARE FOUND TO BE LISTED COMPANI ES FOR MAKING IT AS AN EXCEPTION TO SECTION 79. 8. M/S KEVENTER PROJECTS LIMITED IS A HOLDING COMPA NY AND FURTHER THERE ARE SHAREHOLDING COMPANIES OF M/S KEVENTER PROJECTS LIM ITED WHO ARE CLAIMED TO BE LISTED COMPANIES. THE FIVE HOLDING COMPANIES OF ONE OF THE HOLDING COMPANY OF THE APPELLANT ARE CLAIMED TO BE LISTED, WHILE THE PROVISIONS REQI RE THAT THE IMMEDIATE SUBSDIARY COMPANY TO BE A LISTED COMPANY. THE REQUIREMENTS OF SECTION 2(18)(B)(B)(C) ARE NOT FULFILLED/COMPLIED BY THE APPELLANT. THERE IS A FUR THER REQUIREMENT THAT THE WHOLE OF SHARE CAPITAL OF SUCH SUBSIDARY COMPANY HAS TO BE HELD BY THE PARENT COMPANY, WHICH IS ALSO NOT BEING FULFILLED BY THE ASSESSEE. THE SO CALLED FIVE (5) LISTED COMPANIES HOLD ONLY 50% SHARES OF M/S KEVENTER PROJECTS LIMITED AN D M/S KEVENTER PROJECTS LIMITED FURTHER HOLDS ONLY 90% SHARES OF THE APPELLANT AND NOT WHOLE OF THE SHARE-CAPITAL. THEREFORE, THE APPELLANT DOES NOT FULFILL THE CONDI TIONS AND REQUIREMENTS OF SECTION 2(18)(B)(B)(C) IN TERMS OF HAVING A LISTED AND WHOL LY OWNED SUBSIDIARY. 9. IF IT IS CONSIDERED FOR THE SAKE OF ARGUMENT TH AT SECTION 2(18)(B)(B)(C) IS APPLICABLE TO THE FIVE LISTED COMPANIES I.E. M/S. MKJ ENTERPRI SES LIMITED; M/S THE RIGHT ADDRESS LIMITED; M/S MKJ DEVELOPERS LIMTED M/S. MADANLAL L IMTED; M/S TWENTY FRST ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 6 CENTURY SECURITES LIMITED THEN THESE DO NOT OWN TH E WHOLE CAPITAL OF M/S. KEVENTER PROJECTS LTD. THEREFORE, THE CONDITIONS OF SECTION 2(18)(B)(B)(C) ARE NOT FULFILLED TO RECOGNISE M/S. KEVENTER PROJECTS LTD. AS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED UNDER SECTION 2(18)(B)(B)(C). THEREFORE, M/S. KEVENTER PROJECTS LTD. BEING A HOLDNG COMPANY CANNOT GIVE FURTHER STATUS TO THE A PPELLANT I.E. M/S PORTSIDE ESTATES LIMITED OF A COMPANY IN WHICH PUBLIC ARE SUBSTANTIA LLY INTERESTED UNDER SECTION 2(18)(B)(B)(C). FURTHER ALSO M/S. KEVNTER PROJECTS LTD. HOLDS ONLY 90% SHARE- HOLDING AND NOT WHOLE CAPITAL OF THE APPELLANT THEREBY NOT FULFILLING THIS CONDITION OF SECTION 2(18)(B)(B)(C). 10. THE CHANGE OF SHARE HOLDNG OF THE ASSESSEE FRO M M/S WILLIAMSON MAGOR LTD. TO M/S. KEVENTER PROJECTS LTD. HAS A CHANGE OF SHARE H OLDING FOR MORE THAN 51% AS REQUIRED IN SECTION 79 AND IT ALSO DOES NOT FALL UN DER EXPLANATION OF THE SECTION 2(18)(B)(B)(C) ON VARIOUS COUNTS AS DISCUSSED IN DE TAIL (SUPRA). THEREFORE, IT IS HELD THAT THE APPELLANT IS NOT ENTITLED TO SET OFF THE B ROUGHT FORWARD LOSS OF RS. 43,08,810/- AS CALCULATED BY THE ASSESSING OFFICER IN THE ASSES SMENT ORDER. IT IS CLARIFIED THAT NO BROUGHT FORWARD LOSS UP TO ASSESSMENT YEAR 2004-05 IS ALLOWED TO BE SET OFF WTH THE INCOME OF ASSESSMENT YEAR 2005- 06. THEREFORE, THE GROUNDS OF APPEAL NO. 3 & 7 ARE DISMISSED WHILE THE OTHER GROUNDS HAVE BEEN DISCUSS ED AS FACTS IN THE ORDER AND NONE OF THESE GROUNDS ALLOW THE ASSESSEE TO CARRY FORWAR D THE LOSS. IN THE RESULT THE ASSESSEE IS NOT ALLOWED TO SET OFF THE CARRY FORWARD LOSS OF RS.64,79,715/- WITH ITS BUSINESS INCOME. 7. WE FIND THAT PRIOR TO 28.09.2004 THE ASSESSEE CO MPANY WAS WHOLLY OWNED SUBSIDIARY OF WILLIAMSON MAGOR & CO. LTD. AS IS EVIDENT FROM E XTRACT OF ANNUAL REPORT OF WILLIAMSON MAGOR & CO. LTD. FOR FY 2002-03 AND 2003 -04 WHICH CLEARLY SHOWS THAT THE ASSESSEE WAS A 100% SUBSIDIARY OF THIS COMPANY DURI NG THOSE YEARS. IT IS ALSO A FACT THAT WILLIAMSON MAGOR & CO. LTD. IS LISTED IN SEVER AL STOCK EXCHANGES AS NARRATED IN THE ABOVE FACTS WITH EVIDENCE. PRIOR TO 28.09.2004, TH E ASSESSEE COMPANY REMAINED A 100% SUBSIDIARY OF WILLIAMSON MAGOR & CO. LTD., WHI CH IS A LISTED AND WIDELY HELD COMPANY. FROM THE ABOVE, IT FOLLOWS THAT BEFORE AC QUISITION OF THE ASSESSEE COMPANY BY KEVENTER PROJECTS LTD. ON 28.09.2014 THE ASSESSEE R EMAINED A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. ON 28.09.2004, THE S HAREHOLDING OF THE ASSESSEE COMPANY WAS PURCHASED BY KEVENTER PROJECTS LTD. TO THE EXTE NT OF 89.99% AND 50.200% OF THAT ARE HELD BY THE COMPANIES NAMELY, (I) MKJ ENTERPRIS ES, (II) THE RIGHT ADDRESS LTD., (III) MKJ DEVELOPERS LTD., (IV) MADANLAL LTD. AND (V) TWE NTY FIRST CENTURY SECURITIES LTD. ALL THE AFORESAID COMPANIES ARE QUOTED IN THE STOCK EXCHANGES AS NARRATED ABOVE AND EVIDENCES ARE FILED IN ASSESSEES PAPER BOOK AS DIS CUSSED ABOVE. THE ASSESSEE HAS ALSO FILED LIST SHOWING THE MARKET QUOTATIONS OF THE AFO RESAID FIVE COMPANIES WHO HAVE INVESTED IN KEVENTER PROJECTS LTD. SHOWING MARKET Q UOTATION AT THE RELEVANT STOCK EXCHANGES AS ON 31.03.2005 AND 31.03.2006. FROM TH IS, IT IS CLEAR THAT THE ABOVE STATED FIVE COMPANIES ARE LISTED COMPANIES AS REQUIRED U/S . 2(18)(B)(A) OF THE ACT AND, THEREFORE, SAFELY CAN BE PRESUMED THAT THEY ARE WID ELY HELD COMPANIES ON WHICH THIS SECTION APPLIES. SINCE MORE THAN 50% OF SHAREHOLDI NG OF KEVENTER PROJECTS LTD. ARE HELD BY ABOVE STATED FIVE COMPANIES, WHICH ARE ESTA BLISHED COMPANIES IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED AND IN SUCH SITUATION IT AMPLY FOLLOWS THAT KEVENTER PROJECTS LTD. IS ALSO A COMPANY IN WHICH PUBLIC ARE SUBSTANT IALLY INTERESTED. BUT THE CIT(A) UPHELD THE ACTION OF AO ON THE FOLLOWING POINTS: I) ACCORDING TO HIM, THE PROVISIONS OF SECTION 2(18 )(B)(B)(C) DOES NOT APPLY TO THE FACTS OF THE ASSESSEES CASE AS A SUBSIDIARY COMPANY IS N OT A LISTED COMPANY. FOR THIS, HE GAVE REASONING THAT, THE LAW PROVIDED IN SECTION 2 (18)(B(B)(C) DOES NOT APPLY AS THE ASSESSEE DOES NOT HAVE A SUBSIDIARY COMPANY WHICH I S A LISTED COMPANY. THIS CLARIFIES ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 7 THAT THERE IS NO SUBSIDIARY COMPANY OF M/S. PORTSID E ESTATES LTD. WHICH IS A LISTED COMPANY. THE ASSESSEE ITSELF IS A SUBSIDIARY COMPA NY OF M/S. KEVENTER PROJECTS LTD. WHICH IS ALSO NOT A LISTED COMPANY. WHILE M/S. KEV ENTER PROJECTS LTD. HAS 11 SHAREHOLDERS WITH NONE OF THEM HAVING EVEN 13% OF S HAREHOLDING. II) THE CIT(A) WAS OF THE VIEW THAT THE FIVE HOLDI NG COMPANIES OF WHICH ONE OF THE HOLDING COMPANIES OF THE ASSESSEE ARE CLAIMED T O BE LISTED WHILE THE PROVISION REQUIRES THAT THE IMMEDIATE SUBSIDIARY COMPANY TO B E LISTED COMPANY. ACCORDING TO CIT(A), SECTION 2(18)(B)(B)(C) PROVIDES EXCEPTION ONLY FOR ANY COMPANY AND NOT GROUP OF COMPANIES IN AGGREGATE/COMBINATION TO HOLD MORE THAN 50% SHARES AS LISTED HOLDING COMPANIES. ACCORDING TO HIM, THIS CHAIN CANNOT GO ON TILL AT LAST SOME COMPANIES AS A GROUP ARE FOUND TO BE LISTED COMPANIES FOR MAKING I T AS AN EXCEPTION TO SECTION 79 OF THE ACT. ACCORDING TO HIM, THE REQUIREMENT OF THE SEC TION IS THAT WHOLE OF THE SHARE CAPITAL OF SUCH SUBSIDIARY COMPANY HAS TO BE HELD BY PARENT COMPANY WHICH IS NOT FULFILLED BY THE ASSESSEE COMPANY. THE SO-CALLED FIVE LISTED CO MPANIES HELD ONLY 50% SHARES OF KEVENTER PROJECTS LTD. AND IN TURN KEVENTER PROJECT S LTD. FURTHER HOLDS ONLY 90% SHARES OF THE ASSESSEE AND NOT THE ENTIRE SHARE CAPITAL. CIT(A) FURTHER NOTED THAT THIS PROVISION PROVIDES EXCEPTION ONLY FOR ANY COMPANY AND NOT GRO UP COMPANIES IN AGGREGATE/COMBINATION TO HOLD MORE THAN 50% SHARES AS A LISTED HOLDING COMPANY. III) HE FURTHER HELD THAT NONE OF THE AFOREMENTIONE D FIVE COMPANIES ARE LISTED ON ANY OF THE STOCK EXCHANGES UNLIKE WILLIAMSON MAGOR & CO. LTD. THE FINDING OF CIT(A) IS NOT BASED ON FACTS AS THE FACTS SPEAK SOMETHING ELSE THAT THE AFORESAID FIVE COMPANIES ARE LISTED COMPANIES AND, THEREFORE, CAN SAFELY BE PRESUMED AS WIDELY HELD COMPANIES ON WHICH THIS PROVISION WILL APPLY BECAUSE THE ASSE SSEE HAS FILED COMPLETE DETAILS SHOWING MARKET QUOTATION OF THE AFORESAID FIVE COMP ANIES AT THE RELEVANT STOCK EXCHANGES AS ON 31.03.2005 AND 31.03.2006. 8. FURTHER, ON THE BASIS OF ABOVE FACTS AND AS ARGU MENTS MADE BY BOTH THE SIDES, NOW, WE HAVE TO GO TO THE PROVISIONS OF SECTIONS 79 AND 2(18)(B) OF THE ACT AND THE RELEVANT PROVISIONS READ AS UNDER: SEC. 79, CARRY FORWARD AND SET OFF OF LOSSES IN TH E CASE OF CERTAIN COMPANIES: NOTWITHSTANDING ANYTHING CONTAINED IN THIS CHAPTER, WHERE A CHANGE IN SHAREHOLDING HAS TAKEN PLACE IN A PREVIOUS YEAR IN THE CASE OF A COM PANY, NOT BEING A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED, NO LOSS IN CURRED IN ANY YEAR PRIOR TO THE PREVIOUS YEAR SHALL BE CARRIED FORWARD AND SET OFF AGAINST T HE INCOME OF THE PREVIOUS YEAR UNLESS- (A) ON THE LAST DAY OF THE PREVIOUS YEAR THE SHARES OF THE COMPANY CARRYING NOT LESS THAN FIFTY- ONE PER CENT. OF THE VOTING POWER WERE BENEFICIALLY HELD BY PERSONS WHO BENEFICIALLY HELD SHARES OF THE COMPANY CARRYING NOT LESS THAN FIFTY- ONE PER CENT. OF THE VOTING POWER ON THE LAST DAY OF THE YEAR OR YEARS IN WHICH THE LOSS WAS INCURRED: [PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY TO A CASE WHERE A CHANGE IN THE SAID VOTING POWER TAKES PLACE IN A PREVIOUS YEA R CONSEQUENT UPON THE DEATH OF A SHAREHOLDER OR ON ACCOUNT OF TRANSFER OF SHARES BY WAY OF GIFT TO ANY RELATIVE OF THE SHAREHOLDER MAKING SUCH GIFT:] PROVIDED FURTHER THAT NOTHING CONTAINED IN THIS SEC TION SHALL APPLY TO ANY CHANGE IN THE SHAREHOLDING OF AN INDIAN COMPANY WHICH IS A SUBSID IARY OF A FOREIGN COMPANY AS A RESULT OF AMALGAMATION OR DEMERGER OF A FOREIGN COM PANY SUBJECT TO THE CONDITION THAT FIFTY-ONE PER CENT. SHARE HOLDERS OF THE AMALGAMATI NG OR DEMERGED FOREIGN COMPANY CONTINUE TO BE THE SHAREHOLDERS OF THE AMALGAMATED OR THE RESULTING FOREIGN COMPANY. ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 8 SECTION 2(18). COMPANY IN WHICH THE PUBLIC ARE SUB STANTIALLY INTERESTED --A COMPANY IS SAID TO BE A COMPANY IN WHICH THE PUBLIC ARE SUBSTA NTIALLY INTERESTED (B) IF IT IS A COMPANY WHICH IS NOT A PRIVATE COMPA NY AS DEFINED IN THE COMPANIES ACT, 1956 (1 OF 1956), AND THE CONDITIONS SPECIFIED EITH ER IN ITEM (A) OR IN ITEM (B) ARE FULFILLED, NAMELY. (A) SHARES IN THE COMPANY ( ) WERE, AS ON THE LAST DA Y OF THE RELEVANT PREVIOUS YEAR, LISTED IN A RECOGNISED STOCK EXCHANGE IN INDIA IN A CCORDANCE WITH THE SECURITIES CONTRACTS (REGULATION) ACT, 1956 (42 OF 1956),AND A NY RULES MADE THERE UNDER; (B) SHARES IN THE COMPANY ( ) CARRYING NOT LESS THAN FIFTY PER CENT OF THE VOTING POWER HAVE BEEN ALLOTTED UNCONDITIONALLY TO, OR ACQ UIRED UNCONDITIONALLY BY, AND WERE THROUGHOUT THE RELEVANT PREVIOUS YEAR BENEFICIALLY HELD BY (A) THE GOVERNMENT, OR (B) A CORPORATION ESTABLISHED BY A CENTRAL, STATE OR PR OVINCIAL ACT, OR (C) ANY COMPANY TO WHICH THIS CLAUSE APPLIES OR ANY SUB SIDIARY COMPANY OF SUCH COMPANY [IF THE WHOLE OF THE SHARE CAPITAL OF SUCH SUBSIDIARY C OMPANY HAS BEEN HELD BY THE PARENT COMPANY OR BY ITS NOMINEES THROUGHOUT THE PREVIOUS YEAR.] FROM THE ABOVE PROVISIONS OF SECTION 79 IT IS CLEAR THAT THIS IS APPLICABLE WHERE A CHANGE IN SHAREHOLDING HAS TAKEN PLACE IN A PREVIOU S YEAR IN THE CASE OF A COMPANY BUT THERE IS ONE EXCEPTION THAT IT EXCLUDES A COMPANY I N WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. IT MEANS THAT SECTION 79 IS VERY CLEAR ON THE FACTS OF THE CASE. 9. THE PROVISIONS OF SECTION 2(18)(B)(B) OF THE ACT CLEARLY REVEALS THAT THIS PROVISION IS IN TWO PARTS. THE REQUIREMENT OF SUB CLAUSE (C) COULD BE FULFILLED EITHER BY ANY COMPANY TO WHICH THIS CLAUSE APPLIES OR ANY SUBSIDIARY COMPANY OF SUCH COMPANY WHERE SUCH SUBSIDIARY COMPANY FULFILLS THE CONDITIONS LAID DOW N IN CLAUSE (B) OF SECTION 2(18) OF THE ACT BY VIRTUE OF BEING A COMPANY IN WHICH PUBLIC AR E SUBSTANTIALLY INTERESTED OR A WIDELY HELD COMPANY. IT WOULD BE SUFFICIENT IF NOT LESS THAN 50% OF THE SHARES OF THE ASSESSEE COMPANY HAVE BEEN ALLOTTED UNCONDITIONALLY TO OR ACQUIRE UNCONDITIONALLY BY AND HELD THROUGHOUT THE RELEVANT PREVIOUS YEAR BY A HOLDING COMPANY, WHICH IS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTE D AND TO WHICH THIS PROVISION APPLIES. ALTERNATIVELY, THE CONDITION COULD ALSO B E FULFILLED IF MORE THAN 50% OF SHARES HAVE BEEN ALLOTTED OR ACQUIRED BY ANY SUBSIDIARY CO MPANY OF SUCH COMPANY WHERE SUCH SUBSIDIARY COMPANY FULFILLS THE CONDITIONS LAID DOW N IN THIS PROVISION AND WHICH IS A COMPANY IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTER ESTED. SUB CLAUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT HAVE TWO PARTS AND BOTH ARE SEPARATE AND INDEPENDENT OF EACH OTHER. WE FIND THAT THE CIT(A) WHILE INTERPRETING SUB-CLAUSE (C) OF SECTION 2(18)(B)(B) OF THE ACT HOLDS THAT THE PROVISION OF THE SECTION TO ASSESSEES CASE IS NOT APPLICABLE AND ACCORDING TO HIM, THE REASON IS THAT SINCE THE SAME DOES NOT HAVE A SUBSIDIARY COMPANY, WHICH IS A LISTED COMPANY. HERE, WE WANT TO MENTIO N THAT CIT(A) COMPLETELY IGNORED THE FACT THAT THERE WILL BE SUFFICIENT COMPLIANCE O F SECTION 2(18)(B)(B)(C) OF THE ACT WHERE NOT LESS THAN 50% OF SHARES OF THE ASSESSEE C OMPANY HAVE BEEN ALLOTTED UNCONDITIONALLY TO OR ACQUIRED UNCONDITIONALLY BY AND HELD THROUGHOUT THE RELEVANT PREVIOUS YEAR BY ANY COMPANY WHICH IS A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED AND IN TURN THIS CLAUSE WILL APPLY. IN THE PRESENT CASE 89.90% OF SHARES OF THE ASSESSEE COMPANY ARE HELD BY KEVENTER PROJECTS LTD. AND KEVENTER PROJECTS LTD.S SHARE ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 9 TO THE EXTENT OF 50.002% ARE HELD BY FIVE LISTED CO MPANIES WHICH ARE COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED AND ARE WIDELY HELD COMPANIES. THIS FACT IS PROVED BY THE DOCUMENTARY EVIDENCE PRODUCED BEFORE US IN A SSESSEES PAPER BOOK WHICH WERE ALREADY AVAILABLE BEFORE THE CIT(A). FURTHER, CIT( A) HELD THAT THE AFORESAID FIVE HOLDING COMPANIES OF ONE OF THE HOLDING COMPANIES O F THE ASSESSEE ARE CLAIMED TO BE LISTED YET, THE REQUIRED PROVISIONS ARE NOT FULFILL ED FOR THE REASON THAT THE PROVISION REQUIRES THAT THE IMMEDIATE SUBSIDIARY COMPANY IS T O BE A LISTED COMPANY. IN OUR VIEW, THE INTERPRETATION OF THE PROVISION IS NOT LIKE THI S. THE REQUIREMENT IS THAT THE AFORESAID FIVE HOLDING COMPANIES OF ONE OF THE HOLDING COMPAN Y ARE LISTED COMPANIES WITH THE STOCK EXCHANGES AND ARE COMPANIES IN WHICH PUBLIC A RE SUBSTANTIALLY INTERESTED AND ARE WIDELY HELD COMPANIES. THE FIRST REQUIREMENT FOR F ULFILLING OF SUB-CLAUSE (C) OF SECTION 2(18)(B)(B) OF THE ACT IS WHERE NOT LESS THAN 50% O F SHARES OF THE ASSESSEE COMPANY HAVE BEEN ALLOTTED UNCONDITIONALLY TO OR ACQUIRE UN CONDITIONALLY BY AND HELD THROUGHOUT THE RELEVANT PREVIOUS YEAR BY HOLDING COMPANY TO WH ICH THIS CLAUSE APPLIES. IN THE PRESENT CASE, THE FIRST CONDITION STANDS SATISFIED FOR THE REASON THAT THE HOLDING COMPANY KEVENTER PROJECTS LTD. WHICH IS HOLDING 89.99% SHAR ES OF THE ASSESSEE COMPANY HAS BEEN JOINTLY HELD BY THE AFORESAID FIVE COMPANIES W HICH ARE ALL ESTABLISHED AS ABOVE ARE LISTED IN RECOGNISED STOCK EXCHANGES. THIS MAKES CLEAR AND EVIDENT THAT KEVENTER PROJECTS LTD. IS A WIDELY HELD COMPANY TO WHICH THI S PROVISION OF SECTION 2(18)(B)(B)(C) IS APPLICABLE AND ASSESSEE IS A WIDELY HELD COMPANY OR A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED. 10. ANOTHER CONCLUSION ARRIVED AT BY CIT(A) THAT S ECTION 2 (18)(B)(B)(C) PROVIDES EXCEPTION ONLY FOR ANY COMPANY AND NOT GROUP OF COM PANIES IN AGGREGATE/GROUP HELD MORE THAN 50% SHARES AS LISTED SUBSIDIARIES. WE AR E OF THE VIEW THAT THE WORD ANY WHICH IS OF UTMOST IMPORTANCE IS TO BE TAKEN INTO C ONSIDERATION. THE TERM ANY HAS BEEN DEFINED IN THE THE LAW LEXICON BY P. RAMANATHA AIYA R, 2 ND EDITION, 1997 AT PAGE NO. 117 AS ONE OR SAME OR ALL. THE WORD ANY HAS BE EN REFERRED IN THE CASE OF BENGAL CHAMBER OF COMMERCE RULES OF TRIBUNAL OF ARBITRATIO N WHICH MEANS ONE OR MORE OUT OF SEVERAL AND INCLUDES ALL. THIS HAS BEEN DECIDED IN THE CASE OF SATYANARAYAN BISWANATH VS. HARAKCHAND RUPCHAND, AIR 1955 CAL 225 . FURTHER, WHILE DEALING WITH THE BIHAR PANCHAYAT ELECTION RULES, 1959, HONBLE P ATNA HIGH COURT IN THE CASE OF ASHIQ HASSAN VS. SDO, AIR 1965 PATNA 446, WHEREIN I T WAS HELD THAT THE WORD ANY MEANS ALL. EVEN THE DICTIONARY OF OXFORD, THE WO RD ANY HAS BEEN TAKEN TO BE MEANING AS ALL. IN VIEW OF THE ABOVE, THE MEANIN G OF THE WORD ANY INCLUDES ALL AND THE WORD ANY COMPANY AS CONTAINED IN SUB-CLAUSE (C) ESSENTIALLY DENOTES MORE THAN ONE COMPANY AND NOT ONLY ONE COMPANY. HERE ALL THE FIV E COMPANIES IN AGGREGATE ARE HOLDING MORE THAN 50% SHARES ARE LISTED SUBSIDIARY COMPANIES OF THE HOLDING COMPANY OF THE ASSESSEE COMPANY. HERE THE ISSUE IS SETTLED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. EMTICI ENGINEERING LTD. (2009) 310 ITR 0266, WHEREIN THE PRINCIPLE LAID DOWN WAS AS UNDER: UPON CAREFUL READING OF SUB-CLAUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT, IT WOULD EMERGE THAT THE SAME IS IN TWO PARTS. THE REQUIREME NTS OF SUBCLAUSE (C) COULD BE FULFILLED EITHER BY ANY COMPANY TO WHICH THIS CLAUS E APPLIES OR ANY SUBSIDIARY COMPANY OF SUCH COMPANY WHERE SUCH SUBSIDIARY COMPANY FULF ILS THE CONDITIONS LAID DOWN IN CLAUSE (B) OF SECTION 108. IT CAN THUS BE SEEN THAT TO FULFIL THE REQUIREMENT NOTED ABOVE, IT WOULD BE SUFFICIENT IF NOT LESS THAN 50 PER CENT . OF THE SHARES OF THE ASSESSEE-COMPANY HAVE BEEN ALLOTTED UNCONDITIONALLY TO OR ACQUIRED U NCONDITIONALLY BY AND HELD THROUGHOUT THE RELEVANT PREVIOUS YEAR BY A HOLDING COMPANY. FOR COMPANY TO WHICH THIS CLAUSE APPLIES, ALTERNATIVELY, THE CONDITION C OULD ALSO BE FULFILLED IF MORE THAN 50 PER CENT. OF THE SHARES HAVE BEEN ALLOTTED OR ACQU IRED BY ANY SUBSIDIARY COMPANY OF ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 10 SUCH COMPANY (I.E., ANY COMPANY TO WHICH SUCH CLAU SE APPLIES) WHERE SUCH SUBSIDIARY COMPANY FULFILS CONDITIONS LAID DOWN IN CLAUSE (B) OF SECTION 108. THE TWO PARTS OF SUB- CLAUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT, ARE S EPARATE AND INDEPENDENT OF EACH OTHER. IF THE COMPANY WHICH IS A SUBSIDIARY COMPANY OF THE HOLDING COMPANY SATISFIES THE REQUIREMENT OF BEING ANY COMPANY TO WHICH THIS CLAUSE APPLIES, IT NEED NOT THEREAFTER, FULFIL THE FURTHER REQUIREMENT OF BEING A COMPANY THE WHOLE OF WHOSE SHARE CAPITAL HAS BEEN HELD BY THE PARENT COMPANY AS PRO VIDED IN SECTION 108(B). IN OTHER WORDS, THERE IS NOTHING IN THE FIRST PART OF SUB-CL AUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT, NAMELY, ANY COMPANY TO WHICH THIS CLAUSE APP LIES WHICH WOULD EXCLUDE THE COMPANY WHICH IS A SUBSIDIARY OF A PARENT COMPANY. THUS, IF A COMPANY WHICH IS SUBSIDIARY OF A PARENT COMPANY INDEPENDENTLY FULFIL S THE REQUIREMENT OF BEING COMPANY TO WHICH THIS CLAUSE APPLIES THE REQUIREMENT OF S UBCLAUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT STANDS FULFILLED. WITH THIS CLARITY IN MIND, IF ONE REVERTS BACK TO T HE PRESENT CASE, IT IS AN ADMITTED POSITION THAT BETWEEN P. B. INVESTMENTS AND TRUSTS LTD. AND K. B. INVESTMENTS LTD., THE TWO COMPANIES HOLD MORE THAN 50 PER CENT. OF THE S HARE CAPITAL OF THE ASSESSEE- COMPANY. P.B. INVESTMENTS AND TRUSTS LTD. AND K. B . INVESTMENTS LTD. ARE COMPANIES TO WHICH THIS CLAUSE APPLIES AS PER SUB-CLAUSE (C) IN SECTION 2(18)(B)(B) OF THE ACT. THIS BEING THE CASE SO FAR AS THE ASSESSEE-COMPANY IS CONCERNED, ITS NOT LESS THAN 50 PER CENT. OF SHARES HAVING BEEN UNCONDITIONALLY ALL OTTED TO P. B. INVESTMENTS AND TRUSTS LTD. AND K. B. INVESTMENTS LTD. TOGETHER AN D SINCE P. B. INVESTMENTS AND TRUSTS LTD. AND K. B. INVESTMENTS LTD. ARE COMPANIES TO WH ICH THIS CLAUSE APPLIES, THE ASSESSEE-COMPANY STANDS COVERED WITHIN THE DEFINITI ON OF SECTION 2(18) OF THE ACT. IN OUR OPINION, THE TRIBUNAL WAS JUSTIFIED IN SO HOLDI NG. WE THUS ANSWER THE QUESTION IN THE AFFIRMATIVE, I.E., AGAINST THE REVENUE AND IN F AVOUR OF THE ASSESSEE. 11. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AN D CASE LAW CITED ABOVE, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGA INST REVENUE. THIS ISSUE OF ASSESSEES APPEAL IS ALLOWED. THIS ISSUE OF ASSESSEES APPEAL IN ITA NO.182/K/2012 FOR AY 2006-07 IS ALSO ALLOWED. 6. IT IS NOT IN DISPUTE BEFORE ME THAT THE FACTS AND C IRCUMSTANCES AND THE BROUGHT FORWARD LOSS IN THE PRESENT ASSESSMENT YEAR RELATES TO THE RESIDUE OF THE BROUGHT FORWARD LOSS WHICH WAS CONSIDERED IN A.Y.2005-06 AN D 2006-07. THEREFORE THE REASONS GIVEN BY THE TRIBUNAL IN ALLOWING THE SET O FF AS CLAIMED BY THE ASSESSEE WILL EQUALLY APPLY TO THE PRESENT ASSESSMENT YEAR ALSO. RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE I DIRECT THE AO TO A LLOW THE CLAIM OF THE SET OFF OF BROUGHT FORWARD LOSS OF RS.3,81,937/-. 7. THE OTHER ISSUE RAISED BY THE ASSESSEE IN GROUND NO .3 WAS ALSO CONSIDERED BY THIS TRIBUNAL IN ITS ORDER REFERRED TO ABOVE FOR A. Y.2006-07. THE TRIBUNAL HELD ON THE ALLOWABILITY OF THE LEGAL AND PROFESSIONAL CHARGES IN CONNECTION WITH THE RENEWAL OF LEASE AND HELD AS FOLLOWS :- 17. THE NEXT ISSUE IN ITA NO. 182/K/2012 FOR AY 20 06-07 IS AS REGARDS TO THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN DISA LLOWING LEGAL AND PROFESSIONAL ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 11 CHARGES BY HOLDING THE SAME TO BE CAPITAL IN NATURE . FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.3: 3(A). ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN DISALLOWING THE LEGAL AND P ROFESSIONAL CHARGES OF RS.9,17,450/- INCURRED LIN CONNECTION WITH THE RENEWAL OF LEASE/T ENANCY AGREEMENT BY CONSIDERING THE EXPENSE TO BE OF CAPITAL NATURE. 3(B). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN UPHOLDINGTHE ACTION OF THE AO IN DISALLOWING THE LE GAL & PROFESSIONAL CHARGES OF RS.9,17,450/- INCURRED IN CONNECTION WITH THE RENEW AL OF LEASE/TENANCY AGREEMENT, BY FOLLOWING THE DECISION OF THE ITAT, VISHAKHAPATNAM BENCH IN THE CASE OF ACIT VS. EFFTRONICS SYSTEMS (P) LTD. (2011) (133 ITD 460) IN PREFERENCE TO THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CIT VS. SAMTEL COLO R LTD. (326 ITR 425). 18. BRIEFLY STATED FACTS ARE THAT DURING FY 2004-05 RELEVANT TO AY 2005-06 ASSESSEE GOT RIGHTS IN LAND SITUATED AT 34/1, DIAMO ND HARBOUR ROAD, KOLKATA AND LEASE RIGHTS IN PORT LANDS PENDING RENEWAL BELONGING TO C ALCUTTA PORT TRUST THROUGH THE SCHEME OF ARRANGEMENTS VIDE JUDGMENT OF HONBLE CAL CUTTA HIGH COURT VIDE CO. PETITION NO. 213 OF 2003 AND ANOTHER CO. APPLICATIO N NO. 132 OF 2003 DATED 19.05.2004. THESE STATEMENTS, FACTS, PAPERS/DOCUME NTS RELATING TO LEASEHOLD RIGHTS IN LAND AND PORT LAND ARE ALREADY ON RECORD OF THE ASS ESSMENT FOR AY 2005-06 COMPLETED U/S. 143(3) OF THE ACT. THE ASSESSEE DURING THE REL EVANT AY 2006-07 CLAIMED LEGAL AND PROFESSIONAL CHARGES AMOUNTING TO RS.9,17,450/- FOR WHICH NECESSARY DETAILS INCLUDING BILLS AND VOUCHERS WERE FILED BEFORE THE AO. THE A SSESSEE CLAIMED THAT THESE EXPENSES ARE AGAINST THE SAID LEASEHOLD PROPERTY BEING LEASE HOLD/TENANCY RIGHTS IN THE IMMOVABLE PROPERTY AT PORT LAND PENDING FOR RENEWAL BELONGING TO CALCUTTA PORT TRUST AND SEVERAL LEGAL MATTERS PENDING BEFORE HONBLE HIGH COURT AT CALCUTTA, DELHI AND HONBLE SUPREME COURT AND ALSO AT OTHER COURTS OF LAW IN CI VIL MATTERS FOR AND AGAINST THE ASSESSEE COMPANY. THE ASSESSEE CONTENDED THAT IN O RDER TO PROTECT AND SAFEGUARD THE RIGHTS, ENTITLEMENTS AND BENEFITS OF LEASEHOLD PROP ERTY AT PORT LAND BEING THE ASSET OF THE ASSESSEE COMPANY, THE COMPANY HAS INCURRED THESE LE GAL AND PROFESSIONAL EXPENSEX AND THE SAME WAS CLAIMED AS BUSINESS EXPENSES. THE AO TREATED THESE EXPENSES AS CAPITAL EXPENDITURE FOR THE REASON THAT THESE EXPENSES PROD UCE ENDURING BENEFITS FOR SEVERAL PREVIOUS YEARS AND HE DISALLOWED THE SAME. AGGRIEV ED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO ALSO CONFIRMED THE ACTION OF AO VIDE PARA 11 OF THE APPELLATE ORDER AS UNDER: 11. IN VIE OF THE JUDGMENT OF THE HONBLE ITAT, VI SHAKHAPATNAM BENCH THE EXPENSES ON LEASE OF PROPERTY CAN ALSO BE CAPITAL IN NATURE ALTHOUGH INCURRED FOR THE RENOVATION OF PROPERTY. THE ASSESSEE HAS INCURRED AN EXPENDIT URE ON THE PROTECTION OF THE TITLE WHICH WILL LAST FOR ANOTHER 50 YEARS, THE BENEFIT I S OF AN ENDURING AND CAPITAL IN NATURE ALSO BEING INCURRED FOR THE TITLE OF THE PROPERTY. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED AND THE ORDER OF THE ASSESSING OFFICER IS UPHELD. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 19. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. THE ASSESSEE HAS FILED COMPLETE DETAILS O F LEGAL AND PROFESSIONAL CHARGES PAID IN CONNECTION WITH SETTLING THE DISPUTES AND REGULA RISING ITS LEASEHOLD RIGHTS IN THE ABOVE PROPERTY. THUS IT IS CLEAR THAT THE EXPENDIT URE ON ACCOUNT OF LEGAL AND ITA NO.1150/KOL/2014-M/S. PORTSIDE ESTATES LTD. A.Y .2007-08 12 PROFESSIONAL CHARGES WAS INCURRED ONLY TO SAFEGUARD ITS INTEREST IN THE LEASEHOLD PROPERTY, THE RIGHTS OF WHICH WERE ALREADY TRANSFER RED IN FAVOUR OF THE ASSESSEE PURSUANT TO THE SANCTION OF SCHEME OF MERGER WAS IN DEED IN THE NATURE OF REVENUE EXPENDITURE SINCE SAME WAS MADE IN THE COURSE OF CA RRYING ON THE BUSINESS OF THE ASSESSEE COMPANY. IT IS ALSO A FACT THAT THE ASSES SEE HAS NOT ACQUIRED ANY NEW ASSET BY VIRTUE OF THIS EXPENDITURE AND ONCE THIS IS THE CAS E THE EXPENSES ARE ALLOWED AS REVENUE EXPENDITURE. THIS ISSUE OF ASSESSEES APPEAL IS AL LOWED. 8. IT IS NOT IN DISPUTE BEFORE ME THAT THE LEGAL AND P ROFESSIONS CHARGES DISALLOWED IN THE PRESENT ASSESSMENT YEAR BY THE REVENUE AUTH ORITIES RELATES TO THE SAME LEASE HOLD RIGHTS OF THE ASSESSEE IN PORT LANDS. THEREFOR E THE DECISION RENDERED BY THE TRIBUNAL IN A.Y.2006-07 WILL EQUALLY APPLY IN THE P RESENT ASSESSMENT YEAR ALSO. FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE FOR A.Y.2006-07, I DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE FO R DEDUCTION OF RS.11,93,700/- INCURRED IN CONNECTION WITH THE RENEWAL OF THE LEAS E. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 02.09.2016. SD/- [ N.V.VASUDEVAN ] JUDICIAL MEMBER DATED : 02.09.2016. [RG PS] COPY OF THE ORDER FORWARDED TO: 1.M/S. PORTSIDE ESTATES LTD., SAGAR ESTATE, 3 RD FLOOR, UNIT-1, 2, CLIVE GHAT STREET, KOLKATA-700001. 2. A.C.I.T., CIRCLE-5, KOLKATA. 3. CIT(A)-VI, KOLKATA. 4. CIT-II, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER A SSTT.REGISTRAR, ITAT, KOLKATA BENCHES