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
- TDS on Purchase of Immovable Property by NRI from NRI
- Capital gain from sale of house property
- Current Account Opening for Sole Proprietorship with Udyam Certificate - Zero Turnover
- INTEREST APPLICABLE ON ITC REVERSAL PORTION
- FORM 26A APPLICABILITY
- When TDS on GST applied
- Before GSTAT- APL-02 Vs APL-04
- Annual return in Gst
- SFT Cash Deposit in Current Account
- Copyright software
- GST Treatment of Insurance Commission for Existing GST Holder
- Cash gift by grand mother to her grand daughter
- Tax amount diff in Gstr1 and 3B in tax compare reports
- Tds on GST in connection with sale to public company
- Restoration of certificate of practice
- Regarding change in correspondence address in SSP portal
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
CAclubindia
