Query regarding carry forward of losses of change of ownership in case of Indian company which is wholly owned subsidiary
Deepa Ahire
The chronology of events is as under;
Nov 2014: M India is Incorporated with paid up capital of INR 1 Cr. [S 48%; MS 51% and Individual 1%]
2015-2016: The shareholding of MS is diluted to 1% by transfer of shares from MS to S. Revised Shareholding is [S 98%; MS 1% and Individual 1%]
2015-2016: Additional 1 Cr capital is raised by all shareholders. [S 98%; MS 1% and Individual 1%]
2017-2018: Shareholding of Individual is transferred to S. Revised Shareholding [S 99%; MS 1%]. The entire group for which S was the ultimate parent entity was sold to a Private Equity Fund 'P'. P acquired all entities by forming an entity termed 'MG Group'
2020-2021: S is merged with MI. Revised Shareholding is MI 99%; MS 1% [Transfer were registered only in 2021-2022]
2021-2022: MI is merged with MG Group Revised Shareholding MG Group 99%; Ms 1%. P sells the entire MG Group to a bigger private equity fund 'IK Partners - UK'
My query is the Indian company has suffered losses of Rs 4 cr whether we can carry forward the losses.
Tax Residency:
MIndia: India
S : Switzerland
Individual: Swiss National
MS Germany
MI : Luxembourg
MG Group: Germany
Tax History:
During the assessment of AY 2016-2017, the ITO had identified the change of ownership and disallowed the carry forward of loss. However the element of loss was insignificant and Mupro did not pursue the matter.