TMI Blog2002 (9) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... on in the assessment year in hand. - - - - - Dated:- 19-9-2002 - Judge(s) : Y. R. MEENA., SHASHI KANT SHARMA. JUDGMENT The judgment of the court was delivered by Y.R. MEENA J.-This appeal is directed against the order and judgment of the Income-tax Appellate Tribunal dated January 31, 2001. The issue for our consideration in this appeal is whether unabsorbed loss can be carried forward and allowed in the case of this assessee when the loss was suffered by four co-operative societies in the preceding year? There were four co-operative societies duly registered with the Registrar of Co-operative Societies for Rajasthan, Jaipur. The co-operative societies are: (i) Rajasthan Co-operative Spinning Mills Ltd., Gulabpura ; (ii) Gangapur Cooperative Spinning Mills Ltd., Gulabpura ; (iii) Ganganagar Co-operative Spinning Mills Ltd., Hanumangarh; and (iv) Gulabpura Cotton Ginning and Pressing Sahkari Samiti Ltd., Gulabpura. The Government of Rajasthan had major shareholding in the aforesaid co-operative societies. The Registrar, Cooperative Societies, Jaipur, made an order under section 17 of the Rajasthan Co-operative Societies Act, 1965, read with rule 13 of the Rajasthan Co-op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... siness continued after merger of all four co-operative societies, the employees and the business are the same, as were run by the earlier four co-operative societies, therefore, it is nothing but a change in the name of the earlier four societies into one. Therefore, for all practical purposes, the loss suffered by the earlier four co-operative societies is the loss of the assessee after merger and it should be allowed against the income of the assessee in the year under consideration. He further submits that the provisions of section 72 should be so construed so as to result in equity and justice. He placed reliance on the following decisions: (1) Saroj Aggarwal v. CIT [1985] 156 ITR 497 (SC) (2) CIT v. Madhukant M. Mehta [1981] 132 ITR 159 (Guj) (3) CIT v. J.H. Gotla [1985] 156 ITR 323 (SC); (4) K.P. Varghese v. ITO [1981] 131 ITR 597 (SC); (5) Tirath Singh v. Bachittar Singh, AIR 1955 SC 830; (6) Mysore Minerals Ltd. v. CIT [1999] 239 ITR 775 (SC) and (7) CIT v. Shaan Finance (P.) Ltd. [1998) 231 ITR 308 (SC). On the other hand, learned counsel for the Revenue, submits that as the provisions of section 72 provide that where the assessee suffers the loss, if that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such inference in such a manner that would lead to equity and justice. Too hyper technical or legalistic approach should be avoided in looking at a provision which must be equitably interpreted and justly administered. It is true that there must be succession by inheritance. But it is possible in a particular case without any express provision either in the deed or in writing to infer from the conduct of the parties that there was succession, and if such a view is possible in spite of the absence of an express provision, in our opinion, such an inference could be and should be drawn. Courts should, whenever possible, unless prevented by the express language of any section or compelling circumstances of any particular case, make a benevolent and justice oriented inference." In CIT v. Madhukant M. Mehta [1981] 132 ITR 159 (Guj), the case of the assessee was that where on the death of the sole proprietor the legal heirs formed a partnership firm and the issue was whether the firm succeeded in the business of the sole proprietor, the assessee is entitled to carry forward loss of sole proprietor and to set off against the income of the firm. The Gujarat High Court has taken the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osses suffered by him in the preceding year. At page 340, their Lordships observed as under: "In view of the aforesaid and in view of the attitude of the law-makers in dealing with this problem as evidenced by the amendment and in the circular originally issued prior thereto and bearing in mind that under the scheme of the Act, where the wife or minor child carries on a running business, the right to carry forward the loss in the running business would be available to the wife or minor child if they themselves were assessed, but the right would be completely lost if the individual in whose total income the loss is to be included is not permitted to carry forward the loss under section 24(2), since that would be the result of the strict literal construction, it is apparent that that could not have been the intent of Parliament. Therefore, where section 16(3) of the Act operates, the profit or loss from a business of the wife or minor child included in the total income of the assessee should be treated as the profit or loss from a 'business carried on by him' for the purpose of carrying forward and set off of such loss under section 24(2) of the Act." In K.P. Varghese v. ITO [198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using Board would be denied the benefit of section 32 because in spite of its being the legal owner it was not using the building for its business or profession. We do not think such a benefit to none situation could have been intended by the Legislature. The finding of fact arrived at in the case at hand is that though a document of title was not executed by the Housing Board in favour of the assessee, but the houses were allotted to the assessee by the Housing Board, part payment received and possession delivered so as to confer dominion over the property on the assessee whereafter the assessee had in its own right allotted the quarters to the staff and they were being actually used by the staff of the assessee. It is common knowledge, under the various schemes floated by bodies like Housing Boards, houses are constructed on a large scale and allotted on part payment to those who have booked. Possession is also delivered to the allottee so as to enable enjoyment of the property. Execution of documents transferring title necessarily follows if the schedule of payment is observed by the allottee. If only the allottee may default the property may revert back to the board. That is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has come into existence in place of those four societies and the business of the assessee-federation is also the same as the business which was run by the four societies, though in their different capacity. In allowing the carry forward of losses suffered by those four societies which were with effect from April 1, 1993, no more in existence thereafter, can their losses be set off against the profit of the assessee-federation which came into existence with effect from April 1, 1993. The relevant provisions for carry forward of losses and set off against the income of the subsequent year are sections, 72, 72A and 78(2) of the Act. The provisions of section 72 provide for the carry forward and set off of the business loss of the assessee. If any assessee suffers a loss and that loss cannot be set off against the income of that year, that loss can be carried forward and can be set off against the income of the subsequent year. The word "assessee" has been used in section 72A. Therefore, the pertinent question is whether the four societies which were no more in existence from April 1, 1993, can their loss be carried forward and set off against the income of the assessee-federation. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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