M/s Peoples Heritage Hospital Ltd, Agra V. CIT,Circle 4(1), Agra

ITA 41/AGR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7680 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-07-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 25-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: E PASS ROAD AGRA PANAAHFP C
• Keywords: Gift; Depreciation; Unabsorbed depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.41/AGR/2011 ASSESSMENT YEAR: 2007-08 PEOPLES HERITAGE HOSPITAL LTD., VS. DY. COMMISSION ER OF INCOME TAX, 7/52-A/1, JAWAHAR NAGAR, CIRCLE 4(1), AGRA. BYE PASS ROAD, AGRA. (PAN: AAHFP 0111 C). (APPELLANT) (RESPONDENT) APPELLANT BY : WRITTEN SUBMISSION RESPONDENT BY : SHRI A.K. SHARMA, JR. D.R. DATE OF HEARING : 20.07.2012 DATE OF PRONOUNCEMENT OF ORDER : 27.07.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 20.10.2010 PASSED BY THE LD. CIT(A)-II, AGRA FOR THE ASSESSMEN T YEAR 2007-08 ON THE FOLLOWING GROUNDS :- 1. THAT WITH REGARDS TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, THE LD. A.O. AND LD. CIT (APPEALS)-II, AGRA HAVE ER RED IN FACT AND LAW IN DENYING THE SET OFF & CARRY FORWARD BUSINESS LOS S TO THE TUNE OF RS.29,94,643/- ITA NO.41/AGR/2011 A.Y. 2007-08 . 2 2. THAT WITH REGARDS TO THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. A.O. AND LD. CIT(APPEALS)-II, AGRA HAS WRON GLY INTERPRETED THE PROVISIONS OF SECTION 79 OF TH3 INCOME TAX ACT WHIL E DISALLOWING THE SET OFF & CARRIES FORWARD BUSINESS LOSS. 3. THAT THE ASSESSMENT IS BAD IN LAW AND BAD ON FAC TS. 4. THAT THE ASSESSEE MAY BE ALLOWED TO ADD, ALTER O R AMEND ANY GROUND OF APPEAL AT THE TIME OF HEARING OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS RUNNING HOSPITAL UNDER THE NAME AND STYLE OF M/S. PEOPLES HERITAGE H OSPITAL LIMITED. DURING THE ASSESSMENT PROCEEDINGS THE POSITION OF SHARE HOLDER FUNDS OF THE COMPANY NOTED BY THE ASSESSING OFFICER (A.O.) IS AS UNDER :- SHARE CAPITAL AS ON 31.03.2007 31.03.2008 1. SHARE CAPITAL 1,00,00,000 25,70,000 2. SHARE APPLICATION MONEY - 74,30,000 3. THE A.O. FURTHER NOTICED THAT DURING THE YEAR SH ARES WORTH RS.74.30 LACS WERE ISSUED/ ALLOTTED TO THE FAMILY MEMBERS OF SHRI HARI KISHAN PIPPAL, I.E. HARI KISHAN HIMSELF, MR. ANISH PIPPAL, MS. BENU PIPPAL, MS. GEETA PIPPAL, MRS. RUCHITA PIPPAL, MR. PARVESH PIPPAL, MR. RAJESH PIPP AL & MR. RAJESH PIPPAL MEANING THEREBY THE SHARES OF RS.74.30 LACS WERE TR ANSFERRED TO THE PIPPAL FAMILY DURING THE YEAR. THE CONTROL AND MANAGEMENT OF THE COMPANY WAS ALSO TRANSFERRED TO PIPPAL FAMILY. THE A.O. FURTHER NOTICED THAT AT THE TIME OF ACQUISITION OF THE COMPANY, THE FINANCIAL POSITION OF THE COMPANY WAS AS UNDER :- ITA NO.41/AGR/2011 A.Y. 2007-08 . 3 F.Y. 2004-05 (-)29,94,643 (BUSINESS LOSS) (-)61,75,924 (UNABSORBED DEPRECIATION) 2005-06 (-)74,28,772 (UNABSORBED DEPRECIATION) 2006-07 8,97,205 (PROFIT) 4. FROM THE ABOVE FINANCIAL POSITION, THE A.O. NOTI CED THAT THE COMPANY HAS INCURRED LOSS OF RS.29,94,643/- IN THE FINANCIAL YE AR (F.Y.) 2004-05. THE COMPANY HAS TAKEN OVER BY DIFFERENT GROUP OF PEOPLE HOLDING SHARES MORE THAN 51%. THE COMPANY IS NOT ONE, WHERE PUBLIC IS SUBST ANTIALLY INTERESTED AS DEFINED IN SECTION 2(18) OF THE ACT. THE A.O. AFTER CONSID ERING THE ASSESSEES REPLY, NOTICED THAT THE ASSESSEE HAD TRIED TO SHIFT ITS ON US ON THE AUDITOR AND IT IS NOT UNDERSTOOD HOW F.Y. 2006-07 IS AN EXCEPTION TO SECT ION 79 AND IN F.Y.2007-08 IS NOT AN EXCEPTION UNDER THE SAME CIRCUMSTANCES. ON THE CONTRARY, THE ASSESSEE HAS ITSELF REVISED ITS RETURN FOR THE F.Y. 2007-08 AND HAS NOT SET OFF THE REMAINING BUSINESS LOSSES IN THE COMPUTATION AFTER BEING POIN TED OUT DURING THE ASSESSMENT PROCEEDINGS. THE A.O. NOTICED THAT THE REPLY OF TH E ASSESSEE IS SELF CONTRADICTORY. THE A.O. ACCORDINGLY NOT ALLOWED TO CARRY FORWARD T HE LOSS OF RS.29,94,643/- IN THE YEAR UNDER CONSIDERATION. IT HAS ALSO BEEN NOT ICED BY THE A.O. THAT THE AUDITOR VIDE PARAGRAPH NO.25B OF THE AUDIT REPORT HAS GIVEN FALSE NOTE ABOUT THE CONTRAVENTION OF SECTION 79 OF THE ACT. THE A.O. A CCORDINGLY DISALLOWED THE CARRY FORWARD LOSS OF RS.29,94,643/-. ITA NO.41/AGR/2011 A.Y. 2007-08 . 4 5. THE CIT(A) CONFIRMED THE ORDER OF THE A.O. AS UN DER :- (PARAGRAPH NO.2.2) 2.2 I HAVE GONE THROUGH THE SUBMISSIONS MADE BY T HE LD. AR, IT IS UNDISPUTED FACT THAT DURING THE YEAR SHARE HOLDING OF THE COMPANY HAS CHANGED BY MORE THAN 51 % AND MANAGEMENT AND CONTR OL OF THE APPELLANT COMPANY HAS BEEN PASSED ON TO PIPPAL FAMI LY. AS PER THE PROVISIONS OF SEC. 79 WHERE A CHANGE IN SHARE HOLDI NG HAS TAKEN PLACE IN THE PREVIOUS YEAR, IN THE CASE OF COMPANY NOT BE ING A COMPANY IN WHICH PUBLIC ARE SUBSTANTIALLY INTERESTED THEN NO LOSS INCURRED IN ANY YEAR PRIOR TO THE PREVIOUS YEAR SHALL BE CARRIED FO RWARD AND SET OFF AGAINST THE INCOME OF PREVIOUS YEAR UNLESS ON THE L AST DAY OF THAT PREVIOUS YEAR AND ON THE LAST DAY OF THE PREVIOUS YEAR IN WHICH THE LOSS WAS INCURRED, THE SHARES OF THE COMPANY I CARR YING NOT LESS THAN 51% OF THE VOTING POWER WERE BENEFICIALLY HELD BY T HE SAME PERSONS. THE ASSESSEE IS NOT COVERED BY EXCEPTIONS AS PROVID ED BY THE TWO PROVISO IN SECTION 79 OF THE ACT. THE PLEA OF THE LD. AR THAT 72.8% OF TOTAL PAID SHARE CAPITAL WAS INTRODUCED BY FAMILY O F SHRI HARI KISHAN PIPPAL DURING FY 2004-05 AND NOT DURING THE YEAR UN DER CONSIDERATION HAS NO MERIT IN IT BECAUSE THAT WAS S IMPLY SHARE APPLICATION MONEY AND NO SHARES WERE ALLOTTED DURIN G THAT YEAR. SIMPLY PAYING THE SHARE APPLICATION MONEY DOES NOT ENTITLE ANY APPLICANT OF SHARES TO AL1OTMENT OF SHARES UNLESS A ND UNTIL THE SAME ARE ALLOTTED BY THE COMPANY. A PERSON WHO HAS ONLY REMITTED SHARE APPLICATION MONEY CAN CLAIM NO STAKE IN THE COMPANY . IT IS ONLY AFTER THE SHARES HAVE BEEN ALLOTTED THAT AN APPLICANT WHO HAD REMITTED THE MONEY BECOMES A SHARE HOLDER AND CAN PARTICIPATE IN THE AFFAIRS OF THE COMPANY AS PROVIDED IN THE ARTICLES OF ASSOCIAT ION. THE SHARES HAVE BEEN ADMITTEDLY ALLOTTED DURING THE YEAR UNDER CONSIDERATION AND MORE THAN 51% OF SHARE HOLDING HAS CHANGED. THE PROVISION OF SEC. 79 OF THE ACT ARE CLEARLY ATTRACTED IN THE APP ELLANTS CASE. THE ACTION OF THE AO IN DISALLOWING THE SET OFF OF CLAI M OF BROUGHT FORWARD LOSSES DOES NOT CALL FOR ANY INTERFERENCE, THEREFOR E, THESE GROUNDS ARE DISMISSED. 6. THE ASSESSEE INSTEAD OF PUTTING HIS PERSONAL PRE SENCE FILED WRITTEN SUBMISSION. AFTER HEARING THE LD. DEPARTMENTAL REP RESENTATIVE AND AFTER GOING ITA NO.41/AGR/2011 A.Y. 2007-08 . 5 THROUGH THE WRITTEN SUBMISSIONS, WE NOTICE THAT ISS UE TO BE EXAMINED IN THE CASE UNDER CONSIDERATION IS CARRY FORWARD AND SET OFF OF LOSS UNDER SECTION 79 OF THE ACT. 7. IN THE WRITTEN SUBMISSIONS IT IS SUBMITTED THAT SHARE APPLICATION MONEY WAS INTRODUCED DURING THE F.Y. 2004-05 RELEVANT TO A.Y. 2005-06 WHICH WAS 72.8% OF THE CAPITAL. THUS, THE CONTROLLING INTEREST WERE A CQUIRED BY THE FAMILY MEMBERS OF HARI KISHAN PIPPAL DURING THE F.Y. 2004-05 RELEVA NT TO A.Y. 2005-06, ONLY IN THE YEAR BUSINESS LOSS OF RS.29,94,643/- WAS INCURRED A ND CARRIED FORWARD. THEREFORE, IT WAS SUBMITTED THAT THE ALLEGATION OF THE A.O. TH AT THE INTENTION OF THE ASSESSEE WAS TO DERIVE BENEFIT FROM THE LOSS MAKING COMPANY IS NOT CORRECT IN SO FAR AS LOSS WAS INCREASED UNDER THE REGIME OF THE SAME MANAGEME NT WHICH WAS ALSO IN OFFICE IN THE YEAR AND THE COMPANY MADE PROFIT. THE MAJOR ITY OF FUNDS IN BUSINESS ALSO PERTAINED TO THE FAMILY MEMBERS OF THE SAME MANAGEM ENT. IT IS FURTHER SUBMITTED THAT SHARE APPLICATION MONEY OF RS.74,30,000/- HAS BEEN SHOWN UNDER THE SHAREHOLDER FUND WITH SHARE CAPITAL IN THE BALANCE SHEET AS ON 31.03.2006 AND 31.03.2005. IT IS ALSO SUBMITTED THAT PURPOSE OF S HARE APPLICATION MONEY IS ALLOTMENT OF SHARES. THE ALLOTMENT OF SHARE WAS DE LAYED IN THE CASE OF THE ASSESSEE DUE TO ILLNESS AND UNTIMELY DEATH OF THE LEGAL ADVI SOR SHRI DEVENDRA GARG AND HIS OFFICE WAS CLOSED AND DOCUMENTS WERE IN HIS OFFICE. IT IS SUBMITTED THAT THE FACTUAL POSITION SHOULD BE CONSIDERED ON ACCOUNT OF THE ASS ESSEES CASE AND CHANGE IN THE ITA NO.41/AGR/2011 A.Y. 2007-08 . 6 SHARE HOLDING PATTERN SHOULD BE CONSIDERED FROM F.Y . 2004-05 RELEVANT TO A.Y. 2005-06 ONLY AND NOT FROM F.Y. 2006-07 RELEVANT TO A.Y. 2007-08. IT IS FURTHER SUBMITTED THAT NO AMOUNT IN FORM OF FRESH CAPITAL W AS BROUGHT DURING THE F.Y. 2006-07 RELEVANT TO A.Y. 2007-08. THE ASSESSEE SUB MITTED THAT PRACTICALLY THERE IS NO CHANGE IN THE SHAREHOLDING PATTERN. THERE IS ON LY AN ACADEMIC CHANGE ON ACCOUNT OF LATE ALLOTMENT OF SHARES. THEREFORE, TH IS SITUATION SHOULD BE VIEWED AS AN EXCEPTION TO SECTION 79 OF THE ACT AND, THEREFOR E, SET OFF OF LOSS MAY BE ALLOWED. 8. AS STATED ABOVE THAT THE ISSUE UNDER CONSIDERATI ON IS PERTAINING TO SECTION 79 OF THE ACT. SECTION 79 OF THE ACT READS AS UNDER:- CARRY FORWARD AND SET OFF OF LOSSES IN THE CASE OF CERTAIN COMPANIES. 79. NOTWITHSTANDING ANYTHING CONTAINED IN THIS CHAPTER , WHERE A CHANGE IN SHAREHOLDING HAS TAKEN PLACE IN A PREVIOU S YEAR IN THE CASE OF A COMPANY, NOT BEING A COMPANY IN WHICH THE PUBL IC ARE SUBSTANTIALLY INTERESTED, NO LOSS INCURRED IN ANY Y EAR 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 SHARE S OF THE COMPANY CARRYING NOT LESS THAN FIFTY-ONE PER CENT OF THE VO TING POWER WERE BENEFICIALLY HELD BY PERSONS WHO BENEFICIALLY HELD SHARES OF THE COMPANY CARRYING NOT LESS THAN FIFTY-ONE PER CENT O F THE VOTING POWER ON THE LAST DAY OF THE YEAR OR YEARS IN WHICH THE L OSS WAS INCURRED [* * *] : (B) OMITTED BY FINANCE ACT 1988 W.E.F. 01.04.1989. ITA NO.41/AGR/2011 A.Y. 2007-08 . 7 [ PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO A CASE WHERE A CHANGE IN THE SAID VOTING POWER TAKES PLACE IN A PREVIOUS YEAR CONSEQUENT UPON THE DEATH OF A SHAREHOLDER OR ON ACCOUNT OF TRANSFER OF SHARES BY WAY OF GIFT TO ANY RELATIVE O F THE SHAREHOLDER MAKING SUCH GIFT :] [ PROVIDED FURTHER THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO ANY CHANGE IN THE SHAREHOLDING OF AN INDIAN COMP ANY WHICH IS A SUBSIDIARY OF A FOREIGN COMPANY AS A RESULT OF AMAL GAMATION OR DEMERGER OF A FOREIGN COMPANY SUBJECT TO THE CONDIT ION THAT FIFTY-ONE PER CENT SHAREHOLDERS OF THE AMALGAMATING OR DEMERG ED FOREIGN COMPANY CONTINUE TO BE THE SHAREHOLDERS OF THE AMAL GAMATED OR THE RESULTING FOREIGN COMPANY.] 9. SECTION 79 IS AN EXCEPTION TO THE SCHEME E NACTED IN CHAPTER VI FOR THE CARRY FORWARD AND SETTING OFF OF A LOSS INCURRED IN ANY E ARLIER YEAR AGAINST THE INCOME OF THE RELEVANT PREVIOUS YEAR. THE PROVISION WAS ENAC TED IN THE IT ACT, 1961, FOR THE FIRST TIME IN ORDER TO DENY THAT BENEFIT TO COMPANI ES NOT BEING COMPANIES IN WHICH THE PUBLIC ARE SUBSTANTIALLY INTERESTED. ON ITS PL AIN TERMS, S. 79 PROVIDES THAT IN THE CASE OF SUCH COMPANIES, IF A CHANGE IN SHAREHOLDING HAS TAKEN PLACE IN A PREVIOUS YEAR, NO LOSS INCURRED IN ANY YEAR PRIOR TO THE PRE VIOUS YEAR SHALL BE CARRIED FORWARD OR SET OFF AGAINST THE INCOME OF THE PREVIO US YEAR. UNLESS (A) BOTH ON THE LAST DAY OF THE PREVIOUS YEAR AND ON THE LAST DAY O F THE YEAR OR YEARS IN WHICH THE LOSS WAS INCURRED, THE SHARES OF THE COMPANY CARRYI NG NOT LESS THAN 51 PER CENT OF THE VOTING POWER WERE BENEFICIALLY HELD BY THE SAME PERSONS. IF THE TERMS OF C1AUSE (A) IS SATISFIED, THE DISQUALIFICATION SUFFE RED BY A COMPANY, BY REASON OF A CHANGE IN THE SHAREHOLDING IN THE PREVIOUS YEAR, IS REMOVED, AND THE COMPANY IS ITA NO.41/AGR/2011 A.Y. 2007-08 . 8 ENTITLED TO THE BENEFIT OF THE PROVISIONS IN CHAPTE R VI RELATING TO THE CARRY FORWARD AND SET OFF OF LOSSES. THE BENEFIT IS AVAILABLE NOT WITHSTANDING THE CHANGE IN THE SHAREHOLDING IN THE PREVIOUS YEAR, IF SHARES REPRES ENTING NOT LESS THAN 51 PER CENT OF THE VOTING POWER REMAIN BENEFICIALLY HELD BY THE SA ME PERSONS ON THE RELEVANT DATES. THE OBJECT SOUGHT TO BE SERVED BY ENACTING S. 79 APPEARS TO BE TO DISCOURAGE PERSONS CLAIMING A REDUCTION OF THEIR TAX LIABILITY ON THE PROFITS EARNED IN COMPANIES WHICH HAD SUSTAINED LOSSES IN EARLIER YEA RS. IT WAS NOT UNUSUAL FOR A GROUP OF PERSONS TO ACQUIRE A COMPANY, WHICH HAD SU FFERED LOSSES IN THE EARLIER YEARS, IN THE EXPECTATION THAT THE COMPANY WOULD EA RN SUBSTANTIAL PROFITS AFTER SUCH ACQUISITION, AND THEY WOULD BENEFIT BY A REDUCTION OF THE TAX LIABILITY ON THOSE PROFITS ON A SET OFF OF LOSSES CARRIED FORWARD FROM EARLIER YEARS BEFORE THE ACQUISITION. THE ACQUISITION OF A COMPANY IN SUCH A CASE WOULD BE EFFECTED BY A CHANGE IN ITS SHAREHOLDING AND THE CONTROL OVER THE COMPANY COULD BE ENSURED BY SECURING THE BENEFICIAL OWNERSHIP OF SHARES CARRYIN G 51 PER CENT OR MORE OF THE VOTING POWER. IF THE CHANGE IN THE SHAREHOLDING DI D NOT RESULT IN HOLDING VOTING POWER OF 51 PER CENT OR IT WAS ESTABLISHED THAT THE SHARES OF THE COMPANY CARRYING NOT LESS THAN 51 PER CENT OF THE VOTING POWER WERE BENEFICIALLY HELD BY THE SAME PERSONS, BOTH ON THE LAST DAY OF THE PREVIOUS YEAR AS WELL AS THE LAST DAY OF THE YEAR OR YEARS IN WHICH THE LOSS WAS INCURRED, IT COULD B E PRESUMED THAT THERE WAS NO ITA NO.41/AGR/2011 A.Y. 2007-08 . 9 CHANGE IN THE CONTROL OVER THE COMPANY AND THE DISQ UALIFICATION IMPOSED ON THE COMPANY BECAUSE OF THE CHANGE IN ITS SHAREHOLDING W OULD STAND REMOVED. 10. AS REGARDS THE CONTENTION OF THE ASSESSEE IN TH E WRITTEN SUBMISSION THAT 72.80% OF TOTAL PAID UP SHARE CAPITAL WAS INTRODUCE D BY THE FAMILY MEMBER OF SHRI HARI KISHAN PIPPAL DURING THE F.Y. 2004-05 RELEVANT TO A.Y. 2005-06 AND NOT IN THE YEAR UNDER CONSIDERATION I.E. A.Y. 2007-08.THIS ASPECT OF THE MATTER HAS BEEN DEALT WITH BY THE CIT(A) IN HIS ORDER HOLDING THAT 72.8% OF TOTAL PAID SHARE CAPITAL WAS INTRODUCED BY FAMILY OF SHRI HARI KISHAN PIPPAL DURING FY 2004-05 AND NOT DURING THE YEAR UNDER CONSIDERATION HAS NO MERIT IN IT BECAUSE THAT WAS SIMPLY SHARE APPLICATION MONEY AND NO SHARES WERE ALLOTTED DURING THAT YEAR. IT WAS FURTHER HELD THAT SIMPLY PAYING THE SHARE APPLICATI ON MONEY DOES NOT ENTITLE ANY APPLICANT OF SHARES TO AL1OTMENT OF SHARES UNLESS A ND UNTIL THE SAME ARE ALLOTTED BY THE COMPANY. A PERSON WHO HAS ONLY REMITTED SHARE APPLICATION MONEY CAN CLAIM NO STAKE IN THE COMPANY. IT IS ONLY AFTER THE SHAR ES HAVE BEEN ALLOTTED THAT AN APPLICANT WHO HAD REMITTED THE MONEY BECOMES A SHAR E HOLDER AND CAN PARTICIPATE IN THE AFFAIRS OF THE COMPANY AS PROVIDED IN THE AR TICLES OF ASSOCIATION. THE SHARES HAVE BEEN ADMITTEDLY ALLOTTED DURING THE YEAR UNDER CONSIDERATION AND MORE THAN 51% OF SHARE HOLDING HAS CHANGED. EVEN OTHERWISE A LSO, THE VIEW OF THE CIT(A) IS CORRECT. IN THIS REGARD, THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SHRI ITA NO.41/AGR/2011 A.Y. 2007-08 . 10 SUBHLAXMI MILLS LTD. (1983) 143 ITR 863 (GUJ) WHEREIN IT WAS HELD THAT IF SECTION 79 OF THE ACT WAS NOT INVOKED IN A.Y. 1962-63, IN W HICH CHANGE IN SHAREHOLDING TOOK PLACE, THE SAME COULD BE INVOKED FOR A.Y. 1965 -66 OR LATER YEARS. ACCORDING TO THE COURT, IT IS TRUE THAT SECTION 79 OF THE ACT IS PART OF MACHINERY SECTION AND IT HAS TO BE READ WITH THE PROVISIONS OF SECTION 72 OF THE ACT, WHICH IN TURN HAS TO BE READ WITH THE PROVISIONS OF SECTION 143(3) OF THE A CT. HOWEVER, LOOKING TO THE SCHEME OF CARRYING FORWARD AND SETTING OFF OF BUSIN ESS LOSSES AS SET OUT IN SECTION 72 OF THE ACT, IT IS OBVIOUS THAT IN EACH A.Y. THE A.O. CONCERNED HAS TO ASCERTAIN AS TO WHAT IS THE AMOUNT OF BUSINESS LOSS WHICH HAS BE EN CARRIED FORWARD FROM THE IMMEDIATELY PREVIOUS A.Y. THAT BEING THE CASE, IF T HE CONDITION OF SECTION 79 OF THE ACT ARE OTHERWISE SATISFIED AND SECTION 79 CAN BE INVOKED, THE QUESTION THAT HAS TO BE ASKED IS WHETHER IN THE EYE OF THE LAW SO F AR AS THE A.Y. 1965-66 IS CONCERNED, THERE WAS ANY BUSINESS LOSS VALIDLY CARR IED FORWARD FROM THE IMMEDIATE PRECEDING A.Y. IT IS OBVIOUS THAT IF THE CONDITION S OF SECTION 79 OF THE ACT ARE OTHERWISE SATISFIED, THERE COULD NOT HAVE BEEN ANY CARRYING FORWARD AND SET OFF OF THE BUSINESS LOSSES INCURRED BY THE ASSESSEE-COMPAN Y PRIOR TO 1960-63 SO FAR AS THE A.YS. 1963-64 OR 1964-65 WAS CONCERNED AND SIMILARL Y EACH SUBSEQUENT ASSESSMENT YEAR WAS CONCERNED. THE COURT HELD THA T SECTION 79 OF THE ACT COULD BE INVOKED IN RESPECT OF AY 65-66 AND 66-67 THOUGH THESE PROVISIONS WERE NOT ITA NO.41/AGR/2011 A.Y. 2007-08 . 11 INVOKED BY THE DEPARTMENT IN AY 62-63 WHERE THERE W AS CHANGE IN SHARE HOLDING OF THE ASSESSEE COMPANY AND SECTION 79 BECAME APPLI CABLE. 11. IN THE LIGHT OF THE ABOVE DISCUSSIONS, THE ADMI TTED FACTS OF THE CASE UNDER CONSIDERATION ARE THAT DURING THE YEAR UNDER CONSID ERATION SHARE HOLDING OF THE COMPANY HAS CHANGED BY MORE THAN 51% AND MANAGEMENT AND CONTROL OF THE COMPANY HAS BEEN PASSED ON TO PIPPAL FAMILY. THERE IS UNABSORBED LOSSES OF RS.29,94,643/- OF A.Y. 2004-2005. THE CIT(A) REJEC TED THE ASSESSEES CONTENTION THAT 72.8% OF TOTAL PAID SHARE CAPITAL WAS INTRODUC ED BY FAMILY OF SHRI HARI KISHAN PIPPAL DURING THE F.Y. 2004-05AND NOT DURING THE YE AR UNDER CONSIDERATION HAS NO MERIT IN ITS CASE BECAUSE THAT WAS SIMPLY SHARE APP LICATION MONEY AND NO SHARES WERE ALLOTTED DURING THAT YEAR. THE SHARES HAVE BE EN ADMITTEDLY ALLOTTED DURING THE YEAR UNDER CONSIDERATION FOR THE REASONS WHATEVER I T MAY BE. THEREFORE, AFTER CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE FIND THAT THE PROVISIONS OF SECTION 79 OF THE ACT IS CLEARLY APPLICABLE TO THE CASE UNDER CONSIDERATION AND IN THE LIGHT OF THE SAID SECTION 79, THE A.O. HAS RIGHTLY DISALLOWED THE CLAIM OF SET OFF OF BROUGHT FORWARD LOSSES AND THE CIT(A) HAS RIGHTLY C ONFIRMED THE ORDER OF THE A.O. WE CONFIRM THE ORDER OF THE CIT(A). ITA NO.41/AGR/2011 A.Y. 2007-08 . 12 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY