AJIT K. SENGUPTA, J. ( 1 ) THIS is a consolidated reference under Section 256 (1) of the Income-tax Act, 1961, for the assessment year 1974-75. The following three questions have been referred to this court at the instance of the assessee :"1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the second return signed by the constituted attorney was invalid in view of the provisions of the amended Act which came into force with effect from April 1, 1976? ( 2 ) WHETHER, on the facts and in the circumstances of the case and having regard to the fact that the assessment made by the Income-tax Officer on the basis of the original return had been set aside to be completed de novo, as per the order of the Appellate Assistant Commissioner, the revised return filed by the assessee in the course of the reassessment was bad in law ? ( 3 ) WHETHER, on the facts and in the circumstances of the case, the Tribunal was right in confirming the disallowance of the assessee's claim for deduction of the enhanced municipal tax with effect from the fourth quarter of 1966-67 ?" 2. No one appeared in support of this reference on behalf of the assessee. We, therefore, decline to answer these questions. 3. At the instance of the Revenue, the following two questions have been raised :"1. Whether, on the facts and in the circumstances of the case and on a correct interpretation of Section 79 (b) of the Income-tax Act, 1961, the Tribunal was justified in holding that, in order to reject the assessee's claim to the benefit of carry forward and set off of earlier years' losses, the Income-tax Officer should give adequate reasons for arriving at his satisfaction that the assessee adopted a device to transfer shares with a view to avoid or reduce any liability to tax ? 2. 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the orders of the Commissioner of Income-tax (Appeals) that the onus to prove that the change in the shareholding of the assessee-company was effected with a view to avoid or reduce any liability to tax was on the Income-tax Officer ; and that as that onus had not been discharged by him, the assessee was entitled to the benefit of carry forward and set off of earlier years' losses' against the income of the assessment year under appeal. " ( 4 ) THE facts relating to these questions as referred to us at the instance of the Revenue are that, formerly, Metro Goldwin Mayer Inc. USA, was the holding company of the assessee. On May 1, 1972, the entire shareholding of the assessee-company was purchased by a Swiss company styled Tra-marsa S. A. The Income-tax Officer, therefore, felt that the shares of the company carrying 51 per cent. of the voting power on the last day of the previous year were not beneficially held by persons who held it on the last day of the previous years, corresponding to the assessment years 1971-72 and 1972-73 when losses were incurred. The Income-tax Officer also stated in the assessment order that the assessee had not furnished any evidence to justify the claim that the change in shareholding was not effected with a view to avoid or reduce liability to tax. ( 5 ) ON appeal, the Commissioner of Income-tax (Appeals), having observed that the Income-tax Officer had not made out any case at all for invoking the provisions of Section 79 (b) against the assessee and not discharging the onus that the change in shareholding was effected with a view to avoid or reduce liability to tax, rejected the assessee's claim of carry forward and set off of losses incurred in earlier years. ( 6 ) BEFORE the Tribunal, the Departmental representative urged that the Commissioner of Income-tax (Appeals) was wrong in his observation that the onus was on the Income-tax Officer to show that the change in the shareholding was effected with a view to avoid or reduce liability to tax. ( 6 ) BEFORE the Tribunal, the Departmental representative urged that the Commissioner of Income-tax (Appeals) was wrong in his observation that the onus was on the Income-tax Officer to show that the change in the shareholding was effected with a view to avoid or reduce liability to tax. Learned counsel appearing for the assessee highlighted the reasons given by the Commissioner of Income-tax (Appeals) for coming to the conclusion that the assessee was entitled to the benefit of carry forward and set off of the losses for the earlier years. The Tribunal upheld the order of the Commissioner of Income-tax (Appeals) by observing that there is no material on record to justify the assessee adopting a device to avoid or reduce any liability to tax. ( 7 ) MR. Bagchi, learned counsel for the Revenue, submitted that the onus was wrongly placed by the Tribunal on the Income-tax Officer to prove that the assessee adopted a device to avoid or reduce any liability to tax. The provisions of Section 79 of the Act have application to companies in which the public are not substantially interested and a change has taken place in the shareholding of the company. Such closely held companies are not entitled to the benefit of carry-forward and set off of an earlier year's loss in the year following unless- (a) on the last day of the previous year the shares of the company carrying 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 ; or (b) the Income-tax Officer is satisfied that the change in the share holding was not effected with a view to avoiding or reducing any liability to tax. ( 8 ) FROM a plain reading of this section, it is clear that, in order to reject the assessee's claim to the benefit of carry-forward and set-off of earlier years' losses, the Income-tax Officer must be satisfied that the assessee entered into a transaction for the purpose of avoidance of or reduction in liability to tax. ( 8 ) FROM a plain reading of this section, it is clear that, in order to reject the assessee's claim to the benefit of carry-forward and set-off of earlier years' losses, the Income-tax Officer must be satisfied that the assessee entered into a transaction for the purpose of avoidance of or reduction in liability to tax. If the change in the shareholding was not effected with that object but with some other object in view, the section would not apply and the company's right to carry forward and set off the loss would not be lost even though the result of the shareholding may be negation or reduction of tax liability. It is the motive of such transaction which is material. ( 9 ) THE Income-tax Officer has not given any reason whatsoever in the order of assessment. Even assuming that the onus to satisfy the Income-tax Officer that the change in the shareholding was not effected with a view to avoid or reduce the tax liability lay on the assessee, even then the Income-tax Officer has to record his satisfaction that the transaction in question was effected with a view to avoiding or reducing any liability to tax. His satisfaction must be based on objective facts. It does not also appear that the Income-tax Officer asked the assessee to explain why the provisions of Section 79 (b) should not be invoked in this particular case. Had that been done, the assessee could have satisfied the Income-tax Officer with the relevant materials that the transfer was not effected for avoiding or reducing any liability to tax. As a matter of fact, the Income-tax Officer had not brought on record any material to show that the impugned transaction was made with a view to avoiding or reducing any liability to tax. He simply disallowed the loss by saying thus :"this is a company in which the public are not substantially interested. Formerly, Metro Goldwin Mayer Inc. was the holding company of the assessee-company. On May 1, 1972, the entire shareholding of this company was purchased by Tramarsa SA. incorporated in Switzerland. The shares of the company carrying 51% of the voting power on the last day of the previous year were not beneficially held by persons who held it on the last day of the previous year corresponding to the assessment years 1971-72 and 1972-73 when losses were incurred. incorporated in Switzerland. The shares of the company carrying 51% of the voting power on the last day of the previous year were not beneficially held by persons who held it on the last day of the previous year corresponding to the assessment years 1971-72 and 1972-73 when losses were incurred. So, under Section 79 (a), no loss for the assessment years 1971-72 and 1972-73 shall be carried forward and set off. Section 79 (b) is not applicable as the assessee failed to furnish evidence to justify its claim that the change in shareholding was not effected with a view to avoid or reduce its liability to tax. " ( 10 ) IN our view, if the terms of Clause (b) of Section 79 are satisfied, the assessee cannot be denied the benefit of carry forward and set off of losses even if there is a change in shareholding in the previous year. This benefit is available notwithstanding the change in the shareholding in the previous year if the change was not effected with a view to avoiding or reducing any liability to tax. The assessee has shown that the change was effected for business and commercial reasons and not in order that the tax liability may be avoided or reduced. The finding of the Commissioner of Income-tax (Appeals) and the Tribunal had not been challenged before us. The Commissioner of Income-tax (Appeals) found on facts that there is no question of any Indian tax liability in view of the losses suffered by the non-resident companies and, accordingly, the Income-tax Officer has not made out any case whatsoever for invoking the provisions of Section 79 (b) of the Act ( 11 ) FOR the reasons aforesaid, we answer these questions, referred at the instance of the Revenue, in the affirmative and in favour of the assessee and against the Revenue. There will be no order as to costs.