Y.R. Meena, J. - (1.) 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 ?
(2.) 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-operative Societies Rules, 1966, for merger of the aforesaid four co-operative socie- ties with all their assets and liabilities into Rajasthan Rajya Sahkari Spinning and Ginning Mills Federation Ltd., Jaipur. Consequent to the above statutory order, all the assets and liabilities, plant and machinery, debtors, creditors, transactions, staff and employees as existing prior to the merger and at book value were incorporated and recorded in the books of the appellant co-operative society with effect from April 1, 1993. Though the business of all these four aforesaid co-operative societies continued it continued in the new name, i. e., Rajasthan Rajya Sahkari Spinning and Ginning Mills Federation Ltd., Jaipur. In terms of Section 18(2) of the Rajasthan Co-operative Societies Act, 1965, the registrations of the merged societies stood cancelled on the registration of the assessee-society and the said societies ceased to exist as corporate bodies. The registration under the Rajasthan Sales Tax Act, Central Sales Tax Act and other laws were taken by the appellant-society in its name on and from April 1, 1993. The assessee-society filed its return of income on October 31, 1994, showing total income at Rs. 1,58,04,510 after setting off brought forward losses of Rs. 2,68,39,504 and claimed that the assessee-society is entitled to set off of the said loss under Section 72 of the Income-tax Act, 1961. The Assessing Officer has negatived the claim of the assessee holding that the assessee-federation is not entitled for set off of the losses suffered by the former four societies which were merged and no more in existence after April 1, 1993. The relevant assessment years are 1994-95 and 1995-96. In appeal before the Commissioner of Income-tax (Appeals), the Commissioner of Income-tax (Appeals), has also confirmed the view taken by the Assessing Officer. The Tribunal has considered the provisions of Sections 72A and 78(2) and held that the assessee is not entitled for carry forward and set off of losses suffered by the earlier four co-operative societies which are ceased from April 1, 1993.
(3.) HEARD learned counsel for the parties. Mr. Ranka, learned counsel for the appellant, submits that the assessee came into existence with effect from April 1, 1993, after merger of four co-operative societies. All the assets and liabilities were taken over by the assessee. The old business 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 cannot be set off against the income of that year so much of the loss as has not been so set off against the income of that year, that loss shall, subject to the other provisions, be carried forward to the following assessment year and that be set off against the income of the following year. ;