set off of brought forward losses-section 72A and 79

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Rajesh agarwal (Querist)
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08 July 2011 co.B(A pvt.ltd.co.)is a 100% subsidiary of co.A.Co.B has huge brought forward losses.In the finacial year 2009-10,co.C acquires 100% shareholding of co.B from Co.A.Co.C can not claim set off for losses of co.B in that finacial year due to the provisions of section 79 of income tax act.My queries in this regard are as under-
1.Whether co.C can claim set off for losses of co.B in the next financial year i.e.2010-11.
2.If the co.B is acquired by Co.D by way of demerger in the financial year 2009-10 or subsequent year.Whether co.D can claim set off for losses of co.B

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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09 July 2011 1.Whether co.C can claim set off for losses of co.B in the next financial year i.e.2010-11.

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Just by acquiring the shares in B, company
C can not get any right to set off B's losses as B is a separate assessee, distinct from C.
Applicability of Section 79 is being wrongly understood by you in reference to company C.
Section 79 is decisive in the case of B only. In case of 100% change in shareholding company B will not be eligible to claim its c/fd losses against the profits of the year in which shareholding so changes, or in subsequent years.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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09 July 2011 2.If the co.B is acquired by Co.D by way of demerger in the financial year 2009-10 or subsequent year.Whether co.D can claim set off for losses of co.B

Reply-
Again, the term "demerger" has been wrongly used by you. It can be merger only.
Under certain conditions, if merger of B company takes place with D company,
D can claim losses of B.

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