RAJASTHAN R.S.S. & GINNING MILLS FED. LTD. versus DY. COMMISSIONER OF INCOME TAX, JAIPUR

Citation: [2014] 7 S.C.R. 336 · Decided: 29-04-2014 · Supreme Court of India · Bench: ANIL R. DAVE · Disposal: Dismissed

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Judgment (excerpt)

[2014] 7 S.C.R. 336 
A 
RAJASTHAN R.S.S. & GINNING MILLS FED. LTD. 
B 
v. 
DY. COMMISSIONER OF INCOME TAX, JAIPUR 
(Civil Appeal No. 3880 of 2003) 
APRIL 29, 2014 
[ANIL R. DAVE AND SHIVA KIRTI SINGH, JJ.] 
Income Tax Act, 1961 - ss. 72 and 72A - Co-operative 
c society -
Amalgamation of -
Set-off of losses_ of 
amalgamating societies against profits of the amalgamated 
society - Entitlement to - Four co-operative societies wherein 
the State Government had substantial share holding, 
amalgamated into appellant co-operative society - Upon 
D amalgamation, registration of said four co-operative societies 
cancelled and all their assets and liabilities taken over by the 
appellant society - After amalgamation, when Income-Tax 
returns filed by appellant society, it wanted to get accumulated 
losses of the aforestated four societies carried forward, so that 
E the same could be set off against the profits of the appellant 
society - Claim of appellant-society - If tenable - Held: So 
far as companies are concerned, there is specific provision 
in the Income Tax Act that upon amalgamation of one 
company with another, losses of the amalgamating 
F 
companies can be carried forward and the amalgamated 
company can get those losses set off against its profits subject 
to the provisions of the Act - But as at the relevant time there 
was no provision under the Act for setting off accumulated 
losses of the amalgamating societies against the profits of the 
amalgamated society, the appe/fant society could not have 
G got the benefit of carrying forward losses of the erstwhile 
societies which were not in existence during the relevant 
Assessment Year - Societies and companies belong to 
different classes and simply because both have a distinct 
H 
336 
RAJASTHAN R.S.S. & GINNING MILLS FED. LTD. v. DY. 
337 
COMMISSIONER OF INCOME TAX, JAIPUR 
legal personality, it cannot be said that both must be given A 
the same treatment - Taxation statutes have to be interpreted 
strictly - No equity in matters of taxation - Rajasthan Co-
operative Societies Act, 1965 - s.16(8). 
Interpretation of Statute$ - Taxing statutes - Requirement 
8 
of strict interpretation - No equity in matters of taxation. 
Vide an administrative decision .taken by the 
Government of Rajasthan, four co-operative societies 
wherein the Government of Rajasthan had substantial 
share holding, were amalgamated into the appellant co-
C 
operative society w.e.f. 01.01.1993. Upon amalgamation, 
registration of the ,said four co-operative societies was 
cancelled and all the assets and liabilities of the said four 
societies were taken over by the appellant society. The 
aforestated four societies were not sound financially and 
D 
had substantial accumulated losses. After amalgamation, 
when Income-Tax returns .for the assessment years 1994-
95 and 1995-96 were filed by the appellant society, it 
wanted to get the accumulated losses of the aforestated 
four societies carried forward, so that the same could be 
E 
set off against the profits of the appellant society under 
the provisions of Section 72 of the Income Tax· Act, 1961. 
The claim of the appellant was negatived by the 
Assessing officer on the ground that the said societies 
F 
were not in existence after their amalgamation into the 
appellant society; and as the said four societies were not 
in existence, their accumulated losses could not have 
b.een carried forward or adjusted against the profits of the 
appellant society. The assessment order was upheld by G 
the CIT (Appeals), the Income Tax Appellate Tribunal and 
the High Court. · c·, 
In the instant appeal, the main submission on behalf 
of the appellant society was that the appellant society, 
being an amalgamated society, must get benefit of setting· H 
338 
SUPREME COURT REPORTS 
[2014] 7 S.C.R. 
A off losses of the co-operative societies which had been 
amalgamated into the appellant society. It was contended 
that by virtue of the provisions of Section 16(8) of the 
Rajasthan Co-operative Societies Act, 1965, read with 
Sections 72 and 72(A) of the Act, the accumulated losses 
B of the amalgamating societies should have been 
permitted to be adjusted or set off against the profits of 
the appellant society; and 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-
C operative societies would continue and therefore, right of 
the amalgamating societ

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