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.
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.
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.
CAclubindia
