LexCOMMISSIONER OF INCOME TAX, U.P. versus SHAH SADIQ AND SONS.
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A COMMISSIONER OF INCOME TAX, U.P. v. SHAH SADIQ AND SONS. APRIL 14, 1987 B [SABYASACHI MUKHARJI AND S. NATARAJAN, JJ.] c Income Tax Act, 1922/lncome Tax Act, 1961-S. 24/s. 297- Losses-Right to carry forward~Accrued under 1922 Act-Whether a vested right-Whether saved by 1961 Act. General Clauses Act, 1897-s. 6(c)-Effect of-On vested rights. Statutory Interpretation-'Saving provision' of statute-Construc- tion of-Rights which are accrued are saved unless they are expressly taken away. D The assessee, a partnership firm, enjoyed the status of a regis- tered firm for the assessment years 1960-61, 1961-62 and 1962-63. In the assessment proceedings for the year 1962-63 the assessee claimed that a loss of Rs.60,054 suffered in the speculation business in the assessment year 1960-61 and the loss of Rs.6,839 suffered in the assess- ment year 1961-62 should he set off against the speculation profit of E Rs:SS,102 for the assessment year 1962-63. The Income Tax Officer rejected the assessee's claim holding that as the assessee was a regis- tered firm, the losses could be carried forward and set off only by the partners and .not by the firm. The appeal by the assessee before the Assistant Appellate Commissioner was dismissed. F In the appeal to the Tribunal, the Tribunal held that the right to carry forward the losses relating to the assessment years 1960-61 and 1961-62 was governed by the Indian Income Tax Act, 1922 and that s. 75(2) of the Income Tax Act, 1961 which was applicable to the assessment year 1960-61 had no application in the facts of this case; that when an Act was passed repealing an earlier enactment, it could not he G said to supersede any right already accrued under the repealed enact- ment unless there was something in the repealing Act to indicate that clearly and, therefore, the assessee was entitled to have the losses brought forward from the preceding two years and set off against the profits earned for the year 1962-63. H In the Reference, the High Court held: (I) that a right had 942 • C.I.T. v. SADIQ & SONS 943 accrued to the assessee hy virtue of 1922 Act which entitled him to have A ~- the losses from speculation business in respect of the assessment year 1960-61 and 1961-62 to be carried forward and set off against the pro- fits in speculation business of future years; (2) that was a right which had accrued to it before the 1961 Act was brought into force; (3) that by virtue of s. 6 of the General Clauses Act that right continued to subsist B and (4) that the Tribunal was right in holding that the assessee was ~ entitled to set off the speculation losses suffered in the assessment years 1%0-61 and 1961-62 against the speculation profits of the assessment -- year 1962-63. Dismissing the Appeal of the Revenue, c HELD: 1. The Allahabad High Court was in error in the view it ·~ took in the decision in Commissioner of Income Tax, Kanpur v. Mangi Ram Gopichand, (111 ITR 807) but it was right in the judgment under appeal and the question was properly answered. (951G-H) 2. The right created by the operation of s. 24(2) of 1922 Act is a D vested right. (951A-B) Gujarat Electricity Board v. Shanti/al R. Desai, [1969] 1 S.C.R. --1 580 at 587 and Isha Valimohamad & Anr. v. Haji Gu/am Mohamad & Haji Dada Trust, [1975] 1 S.C.R. 720 at 723, referred to. E • 3. Under the Income Tax Act of 1922, the assessee was entitled to carry forward the losses of the speculation business and set off such ) losses against profits made from that businc•• in future years. The right of carrying forward and set off accrued to the arsessee under the Act of .J 1922. A right which had accrued and bad become vested continued to be F capable of being enforced notwithstanding the repeal of the statute under which that right accrued unless the repealing statute took away such right expressly or by necessary implication. This is the effect of s. 6 of the General Clauses Act, 1897. [951B-D) 4. Whatever rights are expressly saved by the 'savings' provision ' stand saved. But, that does not mean that rights which are not saved by G the 'saving' provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted. Rights which have accrued are saved unless they are taken away ex- pressly. This is the principle behinds. 6(c) of the General Clauses Act, 1897. (951E-F] H 944 SUPREME COURT REPORTS [1987
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