Section 57 : Change in control

1) If the ownership of any entity changes by fifty percent or more as compared to its ownership until before the last three years, the entity shall be deemed to have disposed the property under its ownership or the liability borne by it.

¹1A) For the purpose of computing change in ownership of fifty percent or more than fifty percent of any entity referred to in sub-section (1), only the following ownership of such entity shall be included:

a) Ownership held by a shareholder holding one percent or more than one percent of the total ownership, and

b) Ownership held by the associated person of a shareholder holding more than one percent of the total ownership of such entity, among shareholders holding less than one percent of the total ownership.

2) If the ownership of an entity is changed, as mentioned in sub-section (1), the entity shall not be allowed to carry out the following acts after such change:-

a) To deduct interest incurred by that entity prior to the change in ownership and carried forward pursuant to sub-section (3) of Section 14,

b) To deduct the loss suffered by that entity prior to the change in ownership, pursuant to Section 20,

c) To carry back a loss suffered after the change in ownership in any income year before such change, pursuant to sub-section (4) of Section 20,

d) To make adjustments pursuant to sub-section (4) of Section 24, if it has been calculated for any amount or expenses pursuant to clause (a) of sub-section (4) of Section 24 prior to the change in ownership, and correction has been made on that amount or expenses pursuant to  sub-section (4) of Section 24 after the change in ownership,

e) To make adjustments pursuant to sub-section (1) of Section 25 if any amount has been calculated pursuant to clause (b) of sub-section (1) of Section 25 prior to the change in ownership, and the right to receive that amount has been relinquished, or in the event of that being a debt claim, such person has written off such amount as a bad debt, after the change in ownership,

f) To subtract, pursuant to Section 36, the loss suffered in disposing any property or liability prior to the change in ownership from the income earned from the disposal of the property or liability after the change in ownership,

g) If the premium has been calculated pursuant to sub-clause (1) of clause (b) of sub-section (4) of Section 60 prior to the change in ownership and such premium has been returned to the insured after the change in ownership to claim for credit accordingly, or

h) To carry forward in the forthcoming year the tax paid in respect of a foreign income prior to the change in ownership, pursuant to sub-section (3) of Section 71.

3) In cases where the ownership of any entity changes in any manner mentioned in sub-section (1) in any income year, the parts before and after the change in ownership in that income year shall be treated as separate income years.

^{1 Inserted by the Financial Act, 2075.}