ITAT allows carry forward of losses in case of shares held by ultimate holding company

Bechtel France SAS Vs DCIT (ITAT Mumbai)

Facts: The taxpayer is a company incorporated in France and engaged in the business of procurement and construction. It had set up a project office at Mumbai with site offices at other locations in India to build certain refinery and certain complex.

The Commissioner of Income-tax observed that there was a change in the immediate shareholding pattern of the taxpayer during the year under consideration (viz. FY 2013-14, corresponding to AY 2014-15), from one group company to another group company.
Accordingly, the CIT invoked its revisionary powers under section 263 of the ITA by holding that the order passed by the AO earlier, ignoring the change in shareholding was erroneous and prejudicial to the interest of the Revenue.

The CIT held that the provisions of section 79 of the ITA [relating to allowability of carry forward and set-off of losses in case of certain companies] applied to the taxpayer and thus, the taxpayer was not entitled to set-off the brought forward accumulated business losses of the earlier years against taxpayer’s income for the current year.

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