Carry forward of loss
This query is : Resolved
02 December 2009
There're 4 shareholders - A,B,C and D each with a stake of 25%. The company makes a heavy loss in that year.
Shareholding pattern - A=B=C=D= 25%.
So, A and B transfer their stake to 'D', the very next year, while C transfers it to 'E'. The company makes a profit.
Shareholding pattern - D : 75%,E:25%(new guy)
Can the loss be carried forward? Nobody is related to anybody here. Are the provisions of Section 79 attracted. Would appreciate a lengthy reply, so that all my doubts could get cleared.
Shareholding pattern - A=B=C=D= 25%.
So, A and B transfer their stake to 'D', the very next year, while C transfers it to 'E'. The company makes a profit.
Shareholding pattern - D : 75%,E:25%(new guy)
Can the loss be carried forward? Nobody is related to anybody here. Are the provisions of Section 79 attracted. Would appreciate a lengthy reply, so that all my doubts could get cleared.
02 December 2009
Section 79(a) attracts and company will loose the carried forward benefit.
02 December 2009
Mr.Warrier,
I whole heartedly appreciate your reply,but can you please explain your stand sir.
'D' who was earlier a shareholder has more than 51% stake now.
Can you please give an explanation as to why you feel sec 79 gets attracted.
I whole heartedly appreciate your reply,but can you please explain your stand sir.
'D' who was earlier a shareholder has more than 51% stake now.
Can you please give an explanation as to why you feel sec 79 gets attracted.
02 December 2009
In the loss making year D's holding was 25%,so according to my understanding 79(a) attracts.
02 December 2009
Thanks Mr.Warrier.
Anybody else whose got an opinion for my query?
Anybody else whose got an opinion for my query?
10 December 2009
I very much agree with Mr. Warrier,
Sec. 79(a) says that in the year of making set off of the loss (i.e. profitable year), the 51% voting power should remain same as that is in the year or years of making loss (loss making year or years).
In the loss making year the shareholding pattern is A=B=C=D=25%.
In the profit making year it is
D=75%
E=25%
So the conditions of Sec. 79(a)is not satisfied, as the 51% voting power is not remained same in the profit making year.
So we can concluded that the benefit of set off losses can not be obtained.
Sec. 79(a) says that in the year of making set off of the loss (i.e. profitable year), the 51% voting power should remain same as that is in the year or years of making loss (loss making year or years).
In the loss making year the shareholding pattern is A=B=C=D=25%.
In the profit making year it is
D=75%
E=25%
So the conditions of Sec. 79(a)is not satisfied, as the 51% voting power is not remained same in the profit making year.
So we can concluded that the benefit of set off losses can not be obtained.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- REGARDING GST ON COMMERICIAL PROPERTY
- Is this income indian or foreign income?
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- ITC temporary reversal and reclaim
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- GST on export of services and Input Credit
- TDS U/S. 194NF
- Applicable TDS rate for sale of property in Nov 2024
- RCM INVOICING FROM NOV-2024
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
- Strategical investment in Public listed company
- CASE INTIMATION OF LIABILITY UNDER SECTION 73(5)(Rule 142(1A)
- Need to correct "Whether it is last installment " response in Form 26 QB
Trending Online Classes
CAclubindia
