Rajasthan R.S.S. & Ginning Mills Fed. Ltd. v. Dy. Commissioner of Income-tax, Jaipur
[Citation -2014-LL-0429-114]

Citation 2014-LL-0429-114
Appellant Name Rajasthan R.S.S. & Ginning Mills Fed. Ltd.
Respondent Name Dy. Commissioner of Income-tax, Jaipur
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 29/04/2014
Judgment View Judgment
Keyword Tags co-operative societies act • co-operative society • amalgamating company • accumulated losses • specific provision • cotton ginning
Bot Summary: Upon amalgamation of the said societies into the appellant society, the registration of the said four co-operative societies had been cancelled and all the assets and liabilities of the said four societies had been taken over by the appellant society by virtue of the aforestated amalgamation. After the amalgamation of the four co- operative societies into the appellant society, when Income- Tax returns for the assessment years 1994-95 and 1995-96 were filed by the appellant society, the appellant society wanted to get the accumulated losses of the aforestated societies, of about Rs.2,68,39,504/-, carried forward, so that the same could be set off against the profits of the appellant society under the provisions of Section 72 of the Income Tax Act, 1961. The learned counsel appearing for the appellant society had submitted that the assessing officer and the authorities below, confirming the view taken by the assessing officer, are not correct for the reason that upon amalgamation of the aforestated four co-operative societies into the appellant society, by virtue of the provisions of Section 16(8) of the Rajasthan Co-operative Societies Act, rights and obligations of the societies so amalgamated would not be affected and Page 5 6 therefore, all the rights which the societies had with regard to carrying forward of their losses would continue, and as the said societies had been amalgamated into the appellant society, the appellant society ought to have been permitted to set off the losses suffered by the amalgamated societies. The learned counsel had relied upon Section 16(8) of Rajasthan Co-operative Societies Act, 1965 which is reproduced hereinbelow: 16(8) The amalgamation, transfer or division made under this section shall not affect any rights or obligations of the societies so amalgamated, or of the society so divided or of the transferee, or render defective any legal proceedings which might have been continued or commenced by or against the societies which have been amalgamated or divided or the transferee; and accordingly such legal proceedings may be continued or commenced by or against the amalgamated society, the new societies or the transferee, as the case may be. The main submission of the learned counsel appearing for the appellant society was that the appellant society, being an amalgamated society, must get benefit of setting off losses of Page 10 11 the co-operative societies which had been amalgamated into the appellant society. His main submission was that by virtue of Section 16(8) of the Rajasthan Co-operative Societies Act, 1965 all legal proceedings initiated against or by the amalgamating co-operative societies would continue and therefore, right of the amalgamating societies with regard to getting their losses carried forward and set off against the profits of the amalgamated society would continue. We agree with the view expressed by the High Court that as there is no provision under the Act for setting off accumulated losses of the amalgamating societies against the profits of the amalgamated society, the appellant society could not have got the benefit of carrying forward losses of the erstwhile societies which were not in existence during the relevant Assessment Year.


REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 3880 OF 2003 RAJASTHAN R.S.S. & GINNING MILLS FED. LTD. APPELLANT VERSUS DY. COMMISSIONER OF INCOME TAX, JAIPUR. ....RESPONDENT JUDGMENT ANIL R. DAVE, J. 1. Being aggrieved by judgment delivered on 19th September, 2002 in Income Tax Appeal No.19 of 2001 by High Court of Judicature of Rajasthan, Jaipur Bench, this appeal has been filed by assessee, which is co-operative society. When appeal was called out for hearing, none had appeared for appellant co-operative society. Upon Page 1 2 perusal of record, we found that learned advocate who had appeared earlier had become senior counsel. In circumstances, we had requested his colleague to appear in matter but he had shown his reluctance to appear for appellant society, especially in view of fact that though more than two letters had been addressed to appellant society for sending vakalatnama or for making appropriate arrangement for its appearance in this Court, appellant society had not even cared to reply to said letters. As appellant society is society wherein State of Rajasthan has substantial interest, we had requested learned advocate Mr. Puneet Jain to assist court by appearing for appellant society and in pursuance of request of this Court, he had rendered his valuable assistance by appearing for appellant society. 2. facts giving rise to present appeal in nut-shell are as under: Page 2 3 There were four co-operative societies in State of Rajasthan wherein Government of Rajasthan had substantial share holding, namely - (i) Rajasthan Co- operative Spinning Mills Ltd.; (ii) Gangapur Co-operative Spinning Mills Ltd.; (iii) Ganganagar Co-operative Spinning Mills Ltd.; and (iv) Gulabpura Cotton Ginning & Pressing Sahkari Samiti Ltd. administrative decision was taken by Government of Rajasthan to amalgamate all aforestated co-operative societies into appellant co- operative society, namely Rajasthan Rajya Sahkari Spinning & Ginning Mills Federation Ltd w.e.f. 01.01.1993. Upon amalgamation of said societies into appellant society, registration of said four co-operative societies had been cancelled and all assets and liabilities of said four societies had been taken over by appellant society by virtue of aforestated amalgamation. aforestated four societies were not sound financially and they had substantial Page 3 4 accumulative losses. After amalgamation of four co- operative societies into appellant society, when Income- Tax returns for assessment years 1994-95 and 1995-96 were filed by appellant society, appellant society wanted to get accumulated losses of aforestated societies, of about Rs.2,68,39,504/-, carried forward, so that same could be set off against profits of appellant society under provisions of Section 72 of Income Tax Act, 1961 (hereinafter referred to as Act ). assessing officer negatived appellant s claim for reason that said societies were not in existence after their amalgamation into appellant society. As said four societies were not in existence, according to assessing officer, their accumulated losses could not have been carried forward or adjusted against profits of appellant society. Assessment orders were passed accordingly. Page 4 5 3. Being aggrieved by above stated assessment orders, appeals were filed before CIT (Appeals) and CIT (Appeals) dismissed said appeals. Further appeals were filed before Income Tax Appellate Tribunal but Tribunal also dismissed appeals. 4. Being aggrieved by common order passed by Tribunal, appellant filed Income Tax Appeal No.19 of 2001 before High Court of Rajasthan and said Income Tax Appeal was also dismissed and therefore, appellant has approached this Court by way of present appeal. 5. learned counsel appearing for appellant society had submitted that assessing officer and authorities below, confirming view taken by assessing officer, are not correct for reason that upon amalgamation of aforestated four co-operative societies into appellant society, by virtue of provisions of Section 16(8) of Rajasthan Co-operative Societies Act, rights and obligations of societies so amalgamated would not be affected and Page 5 6 therefore, all rights which societies had with regard to carrying forward of their losses would continue, and as said societies had been amalgamated into appellant society, appellant society ought to have been permitted to set off losses suffered by amalgamated societies. learned counsel had relied upon Section 16(8) of Rajasthan Co-operative Societies Act, 1965 which is reproduced hereinbelow: 16(8) amalgamation, transfer or division made under this section shall not affect any rights or obligations of societies so amalgamated, or of society so divided or of transferee, or render defective any legal proceedings which might have been continued or commenced by or against societies which have been amalgamated or divided or transferee; and accordingly such legal proceedings may be continued or commenced by or against amalgamated society, new societies or transferee, as case may be. 6. learned counsel had further submitted that reading Section 72(1) of Act with Section 16(8) of Rajasthan Page 6 7 Co-operative Societies Act, 1965 clearly denotes that appellant assessee had right to carry forward losses incurred by amalgamating societies and set off business losses of said societies against profits and gains of appellant society. 7. He had further submitted that word company used in Section 72(A) of Act should be given wide interpretation so as to include societies in term company because like companies, societies also have distinct legal personality and there is no reason for authorities under Act to give different treatment to co-operative societies. 8. It had further been submitted that appellant society had vested right to get accumulated losses of amalgamated societies adjusted against profits of appellant society and said vested right could not have been taken away by assessing officer. So as to substantiate his submission, he had relied upon judgment delivered in case of Page 7 8 Commissioner of Income Tax v. M/s. Shah Sadiq and Sons 1987(3) SCC 516. 9. He had, therefore, submitted that appeal deserved to be allowed and appellant society should be permitted to set off accumulated losses of amalgamating societies against profits of appellant society. 10. On other hand, learned counsel appearing for authorities of Income Tax Department had submitted that concurrent findings of fact, and views expressed by all authorities below and High Court were absolutely correct and therefore, impugned judgment did not require any interference. It had been submitted by him that registration of amalgamating societies had been cancelled upon amalgamation and as they were not in existence at time when appellant society was assessed, there was no question of carrying forward accumulated losses of amalgamating societies and adjusting them against profits of appellant society. Page 8 9 11. He had drawn our attention to provisions of Section 72 and 72A of Act. He had further submitted that upon conjoint reading of Section 72 and 72A of Act, it is clear that co-operative societies cannot get benefit of carrying forward and setting off accumulated losses if said societies were not in existence. Only in case of company , benefit of set off could be availed by amalgamated company, if amalgamating company had accumulated losses which could have been carried forward and adjusted against profits of amalgamated company in accordance with provisions of Act. 12. So as to substantiate his submissions, he had relied upon judgments delivered in case of Commissioner of Income Tax, Lucknow v. Sh. Madho Pd. Jatia 1976(4) SCC 92 and M/s. Baidyanath Ayurved Bhawan (Pvt.) Ltd., Jhansi v. Excise Commissioner, U.P. and others 1971(1) SCC 4. He had also relied upon judgment delivered in case of Commissioner of Income Page 9 10 Tax, Bombay v. Maharashtra Sugar Mills Ltd., Bombay 1971 (3) SCC 543. Upon perusal of aforestated judgments, which support learned counsel appearing for Income Tax authorities, it is clear that tax statute should be interpreted very strictly as there is no equity in tax matters and nothing can be read which is not in section. 13. Thus, learned counsel appearing for respondent authorities had submitted that impugned judgment is just and correct and therefore, appeal deserved to be dismissed. 14. We had heard learned counsel and had also perused records pertaining to case and had also gone through judgments referred to by them, and upon hearing them we are of view that judgment delivered by High Court is absolutely just and proper. 15. main submission of learned counsel appearing for appellant society was that appellant society, being amalgamated society, must get benefit of setting off losses of Page 10 11 co-operative societies which had been amalgamated into appellant society. According to him by virtue of provisions of Section 16(8) of Rajasthan Co-operative Societies Act, 1965, read with Sections 72 and 72(A) of Act, accumulated losses of amalgamating societies should have been permitted to be adjusted or set off against profits of appellant society. His main submission was that by virtue of Section 16(8) of Rajasthan Co-operative Societies Act, 1965 all legal proceedings initiated against or by amalgamating co-operative societies would continue and therefore, right of amalgamating societies with regard to getting their losses carried forward and set off against profits of amalgamated society would continue. 16. We are not in agreement with submissions made by learned counsel appearing for appellant for reason that for purpose of getting carried forward losses adjusted or set off against profits of subsequent years, there must be some provision in Act. If there is no provision, Page 11 12 societies which are not in existence cannot get any benefit. losses were suffered by societies which were in existence at relevant time and their existence or legal personality had come to end upon being amalgamated into another society. 17. normal principle is that non-existent person cannot file income tax return and therefore, cannot carry forward its losses after its existence comes to end. All those four societies, upon their amalgamation into appellant society, had ceased to exist and registration of those societies had been cancelled. In circumstances, those societies had no right under provisions of Act to file return to get their earlier losses adjusted against income of different legal personality i.e. appellant society. 18. So far as companies are concerned, there is specific provision in Act that upon amalgamation of one company with another, losses of amalgamating companies can be carried forward and amalgamated company can get those Page 12 13 losses set off against its profits subject to provisions of Act. This is permissible by virtue of Section 72 of Act but there is no such provision in case of co-operative societies. 19. It is pertinent to note that such provision has been made only with regard to amalgamation of companies and later on similar provisions were made with regard to banks, etc., but at relevant time there was no such provision which would permit amalgamating co-operative society to carry forward and adjust such losses against profits of amalgamated co-operative society. 20. submission made by learned counsel appearing for appellant with regard to discrimination and violation of Article 14 of Constitution of India would also not help appellant, as in our opinion, there is no discrimination. societies and companies belong to different classes and simply because both have distinct legal personality, it cannot be said that both must be given same treatment. Page 13 14 21. We agree with view expressed by High Court that as there is no provision under Act for setting off accumulated losses of amalgamating societies against profits of amalgamated society, appellant society could not have got benefit of carrying forward losses of erstwhile societies which were not in existence during relevant Assessment Year. 22. We are also of view that in all tax matters one has to interpret taxation statute strictly. Simply because one class of legal entities are given some benefit which is specifically stated in Act does not mean that legal entities not referred to in Act would also get same benefit. As stated by this Court on several occasions, there is no equity in matters of taxation. One cannot read into section which has not been specifically provided for and therefore, we do not agree with submissions of learned counsel appearing for appellant and we are not prepared to read something in section which has not been provided for. Page 14 15 judgments referred to hereinabove support view which we have expressed here. 23. For reasons stated hereinabove, appeal is dismissed with no order as to costs. .,J. (Anil R. Dave) .,J. (Shiva Kirti Singh) New Delhi; April 29, 2014 Page 15 Rajasthan R.S.S. & Ginning Mills Fed. Ltd. v. Dy. Commissioner of Income-tax, Jaipur
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