set off carry forwad of losses when majority share holder ch

Dear All,

The majority share holder(51%) of a company changes, means one Indian Company(A) buy 51% stake of another Indian company(B)  which was hold by a foreign company(C).

 

The Indian Company(B) has some carry forward losses, does the Indian Company(A) will enjoy the same carry forward losses when it buy the 51% stake in Indian company(B).

pls educate me the section & the clauses as per Income Tax Act.

 

thanks & regards

 

usn

 

 

 

Replies (1)

Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place in a previous year in the case of a company, not being a company in which the public are substantially interested, no loss32 incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year unless—

             (a)   on the last day of the previous year the shares of the company carry-ing not less than fifty-one per cent of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent of the voting power on the last day of the year or years in which the loss was incurred 33[* * *] :

                      34[Provided that nothing contained in this section shall apply to a case where a change in the said voting power takes place in a previous year consequent upon the death of a shareholder or on account of transfer of shares by way of gift to any relative of the shareholder making such gift :]

                      35[Provided further that nothing contained in this section shall apply to any change in the shareholding of an Indian company which is a subsidiary of a foreign company as a result of amalgamation or demerger of a foreign company subject to the condition that fifty-one per cent shareholders of the amalgamating or demerged foreign company continue to be the shareholders of the amalgamated or the resulting foreign company.]

regards

tarun rustagi

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