Law: Income Tax Act, 1961

Section: 32(2)&72.

Income-tax-----Unabsorbed depreciation---Loss--Carry forward and set off--Assessee a public limited company---Its manufacturing activities suspended in 1965 and restarted in 1971---Claim for setting off losses and unabsorbed depreciation of earlier years in assessment year 1973-74---Limited company a distinct legal entity---Change in ownership of shares does not affect legal identity of company---Finding of fact by Tribunal that both constituted same business-¬Loss and unabsorbed depreciation of earlier years can be set off in the year; 1973-74--Indian Income Tax Act, 1961, Ss.32(2) & 72. The assessees, a public limited company, manufactured articles like steel and metal sheets. The manufacturing operations were suspended on November 30, 1965, and restarted on September 1, 1971. In the assessment year 1973-7-t. the assessee claimed set off of losses and unabsorbed depreciation carried forward from 1965-66 to 1968-69. The Income-tax Officer did not allow the same. But the Tribunal on second appeal, held in favour of the assessee. On a reference, the Revenue contended that there was a change in the ownership of the majority shareholding of the company and it amounted to a change in the ownership of the company. It is also contended that the two lines of business carried on by the company in 1965 and 1971 did not constitute the same business within the meaning of section 72(1)(i) of the Income-tax Act, 1961 and the assessee's claims for adjustment of unabsorbed depreciation in respect of the assessment year prior to 1967-68 should not be allowed: Held, (i) that a limited liability company was different from a partnership and it was a distinct legal entity. Since the assessee was a limited liability company, change in the ownership of its shares would have no effect on the legal identity of the company; (ii) that the Income-tax Appellate Tribunal had recorded a finding that there was only a temporary suspension of business during the period November 30, 1965 to September 1, 1971, and that the manufacturing activities resumed from September 1, 1971, were not in anyway different from the manufacturing activities which the company carried on till November 30,…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492