Om Parkash, J. - (1.) At the instance of the Revenue, the Income-tax Appellate Tribunal has referred the following question under Section 256(1) of the Income-tax Act, 1961 (for short "the Act"), to this court : " Whether, on the facts and in the circumstances of the case and on the true interpretation of Section 79, the Tribunal is justified in holding that the provisions of Section 79 are not applicable to the facts of the present case, as no finding has been given in this case that the change in the shareholdings was effected with a view to avoiding or reducing any liability to tax ?"
(2.) The assessee-company is a private limited company in which the public are not substantially interested. Its accounting period for the assessment year 1975-76 under consideration is the calendar year 1974. It claimed during the accounting period under consideration that unabsorbed depreciation and the trading loss of the assessment year 1973-74, the accounting period for which was the calendar year 1972, be brought forward and set off against its income of the assessment year 1975-76.
(3.) The Income-tax Officer rejected such claim of the assessee on the ground that on account of the change in the shareholding of the assessee-company, the shares of the assessee were less than 51 per cent. on the last day of the previous year, i.e., on December 31, 1974. The Income-tax Officer, therefore, took the view that the case of the assessee came within the purview of Section 79 of the Act, as it failed to retain the requisite percentage of shares on December 31, 1974. The contention of the assessee was that disqualification within the purview of Section 79 would arise only when the change in the shareholding was made with a view to avoiding or reducing the tax liability and since there was no such intention on the part of the assessee, it would be entitled to claim set off of the loss of the assessment year 1973-74 against the income of the assessment year 1975-76. Such submission was, however, rejected by the assessing authority who was of the view that Clauses (a) and (b) of Section 79 of the Act are cumulative and concomitant and not alternative to one another. A similar view was taken by the Appellate Assistant Commissioner in appeal.;