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

                         [2014] 7 S.C.R. 336


A        RAJASTHAN R.S.S. & GINNING MILLS FED. LTD.
                                  v.
          DY. COMMISSIONER OF INCOME TAX, JAIPUR
                 (Civil Appeal No. 3880 of 2003)

B                          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 societies with regard to getting their
  losses carried forward and set off against the profits of
  the amalgamated society would continue.

          Dismissing the appeal, the Court
D
      HELD:1.1. For the purpose of getting carried forward
  losses adjusted or set off against the profits of
  subsequent years, there must be some provision in the
  Income Tax Act, 1961. If there is no provision, thej
E societies which are not in existence cannot get any
  benefit. The losses were suffered by the societies which
  were in existence at the relevant time and their existence
  or legal personality had come to an end upon being
  amalgamated into another society. [Para 16) [346-8-C]
F      1.2. The normal principle is that a non-existent person
  cannot file an income tax return and therefore, cannot
  carry forward its losses after its existence comes to an
  end. All those four societies, upon their amalgamation
  into the appellant society, had ceased to exist and
G registration of those societies had been cancelled. In the
  circumstances, those societies had no right under the
  provisions of the Act to file a return to get their earlier
  losses adjusted against the income of a different legal
  personality i.e. the appellant society. [Para 17) [346-D-E]
H
   RAJASTHAN R.S.S. & GINNING MILLS FED. LTD. v. DY.   339
       COMMISSIONER OF INCOME TAX, JAIPUR
     1.3. So far as companies are concerned, there is a A
specific provision in the Income Tax Act that upon
amalgamation of one company with another, losses of
the amalgamating 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. B
This is permissible by virtue of Section 72 A of. the 1
Income Tax Act but there is no such provision in the case
of co-operative societies. It is pertinent to note that such
a provision has been made only with regarq to
amalgamation of companies and later on similar c
provisions were made with regard to banks, etc., but at
the relevant time there was no such provision which
would permit the amalgamating co-operative society to
carry forward and adjust such losses against the profits
of the amalgamated co-operative society. [Paras 18, 19] D
 [346-F-H; 347-A]

     1.4. The submission made on behalf of the appellant
with regard to discrimination and violation of Article 14
of the Constitution cannot be accepted, as there is no
discrimination. The societies and companies belong to E
different classes and simply because both have a distinct
legal personality, it cannot be said that both must be
given the same treatment. [Para 20] [347-A-B]

     1.5. As there is no provision under the Act for setting F
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 societie.s which
were not in existence during the relevant Assessment G
Year. [Para 21] [347-C-D]
     1.6. Also, in all the 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 the Act does not mean that the legal entities not H
     340      ·SUPREME COURT REPORTS                                       [2014) 7. S.C.R.


 A . referred to in the Act would also get the sam~ benefit.
     There is no equity in matters of taxation. One cannot read
    .into a. section which has n9t been specifically provided
     for and therefore, one cannot read something in the
     section whic~ has not been provided for. [Para 22) [347-
 B D-FJ                    .
     ·. ·The Commissioner of Income Tax, Lucknow v. Sh.
    Madho Pd. Jatia 1976(4) sc·c 92.: 1977 (1) SCR 665; Mis.
    Baidyanath Ayurved Bhawan (Pvt.) Ltd., Jhansi v. The Excise
    Commissioner:, .U.P. and ·Others 1971 (1) SCC 4: · 1971 (2)
· C SCR 590; and Commissioner of Income Tax, Bombay v.
    Maharashtra Sugar Mills Ltd., Bombay 1971 (3) SCC 543:
    1972 (1) SCR 202 ... relied on.                           ·
       Commissioner of l(lcomfi. Tax v. Mis. Shah Sadiq and
 D Sans 1987(3) SCC 516: 1987 (2) SCR 942 - referred to.
                                    Case Law Reference :
           · 1987 (2) SCR 942                referred to                        Para 8
           1977 (1) SCR 665                 . relied/on                         Para 12
 E
           '1971 (2) SCR 590                 relied on                          Para 12
                                                                                  I  ,
           1972 (1) SCR 202                  relied on                          Para 12
         CIVIL APPELLATE JURISDICTION.:. Civi,i' Appeal No.
 F   3880 'of 2003.
          From the Judgment and Ordet dated 19.09.2002 of the
     High Court of ~udicaturei for Rajasthan, Jaipur Branch, Jaipur,
     in D.B. lnooQie Jax Appeal Na. 19. of 200'. · ·
                   .   •   'I   ,   '   '             ,.       f
                                                                 ·     '
               I                                . '        '       \


 G         Puneet Jain (for Pralibha Jain) for.the Appellant. ..
           H. Raghavendra Rao (for Anil Katiyar) for the Respondent.

           The Judgment of the Court was delivered by
 H         ANIL R. DAVE, J. 1. Being aggrieved oy the judgment
  RAJASTHAN R.S.S. &GINNING MILLS FED. LTD. v. DY.    341
COMMISSIONER OF INCOME TAX, JAIPUR [ANIL R. DAVE, J.]
delivered on 19th September, 2002 in Income Tax Appeal A
No.19 of 2001 by the High Court of Judicature of Rajasthan,
Jaipur Bench, this appeal has been filed by the assessee .• which
is a co-operative society. w'hen the appeal was caned out for
hearing, none had appeared for the appellant co-operative
society. Upon perusal of the record, we found that the learned B
advocate who had appeared earlier had become a senior
counsel. In the circumstances, we had requested his colleague
to appear in the matter but he had shown his reluctance to
appear for the appellant society, especially in view of the fact
that though more than two letters had been addressed to the         c
 appellant society for sending vakalatnama or for making
 appropriate arrangement for its appearance in this Court, tne
 appellant society had not even cared to reply to the said letters.
 As the appellant society is a society wherein the State of
 Rajasthan has substantial interest, we had requested learned D
 advocate Mr. Puneet Jain to assist the court by appe~ring for
 the appellant society and in pursuance of the request of this
 Court, he had rendered his valuable assistance by appearing
 for the appellant society. ·.

    2. The facts giving rise to the present appeal in a nut-shell   E
are as under:

      There were four co-operative societies in the State of
Rajasthan wherein the Government of Rajasthan had
substantial share holding, namely- (i) Rajasthan Co-operative F
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. An
administrative decision was taken by the Government of.
Rajasthan to amalgamate all the aforestated co-operative G
societies into the appellant co-operative society, namely
Rajasthan Rajya Sahkari Spinning & Ginning Mills Federation
Ltd w.e.f. 01.01.1993.

     Upon amalgamation of the said societies into the appellant
                                                                    H
    342     SUPREME COURT REPORTS                  [2014) 7 S.C.R.


A   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. The aforestated four
    societies were not sound financially and they had substantial
8   accumulated losses. 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
C   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
    (hereinafter referred to as 'the Act').

         The assessing officer negatived the appellant's claim for
D   the reason that the said societies were not in existence after
    their amalgamation into the appellant society. As the said four
    societies were not in existence, according to the assessing
    officer, their accumulated losses could not have been carried
    forward or adjusted against the profits of the appellant society.
E   Assessment orders were passed accordingly.

         3. Being aggrieved by the above stated assessment
    orders, appeals were filed before the CIT (Appeals) and the
    CIT (Appeals) dismissed the said appeals. Further appeals
F   were filed before the Income Tax Appellate Tribunal but the
    Tribunal also dismissed the appeals.

       4. Being aggrieved by the common order passed by the
  Tribunal, the appellant filed Income Tax Appeal No.19 of 2001
  before the High Court of Rajasthan and the said Income Tax
G Appeal was also dismissed and therefore, the appellant has
  approached this Court by way of the present appeal.
        5. The learned counsel appearing for the appellant society
    had submitted that the assessing officer and the authorities
H   below, confirming the view taken by the assessing officer, are
  RAJASTHAN R.S.S. &GINNING MILLS FED. LTD. v. DY     343
COMMISSIONER OF INCOME TAX, JAIPUR [ANIL R. DAVE, J.]

not correct for the reason that upon amalgama·tion of the A
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
therefore, all tl'le rights which the societies had with regard to B
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-            c
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 D
     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 E
     against the amalgamated society, the new societies or the
     tran.sferee, as the case may be."
      6. The learned counsel had further submitted that reading
Section 72(1) of the Act with Section 16(8) of the Rajasthan
Co-operative Societies Act, 1965 clearly denotes that the         F
appellant assessee had a right to carry forward losses incurred
by the amalgamating societies and set off the business losses
·of the said societies against the profits and gains of the
appellant society.
     7. He had further submitted that the word 'company' used G
in Section 72(A) of the Act should be given wide interpretation
so as to include societies in the term 'company' because like
companies, societies also have a distinct legal personality and
there is no reason for the authorities under the Act to give
different treatment to co-operative societies.                  H
    344      SUPREME COURT REPORTS                 [2014] 7 S.C.R.


A     8. It had further been submitted that the appellant society
  had a vested right to get the accumulated losses of the
  amalgamated societies adjusted against the profits of the
  appellant society and the said vested right could not have been
  taken away by the assessing officer. So as to substantiate his
B submission, he had relied upon the judgment delivered in the
  case of Commissioner of Income Tax v. Mis. Shah Sadiq and
  Sons 1987(3) SCC 516.

       9. He had, therefore, submitted that the appeal deserved
  to be allowed and the appellant society should be permitted to
C set off accumulated losses of the amalgamating societies
  against the profits of the appellant society.

        10. On the other hand, the learned counsel appearing for
  the authorities of the Income Tax Department had submitted that
D the concurrent findings of the fact, and the views expressed by
  all the authorities below and the High Court were absolutely
  correct and therefore, the impugned judgment did not require
  any interference. It had been submitted by him that the
  registration of the amalgamating societies had been cancelled
E upon the amalgamation and as they were not in existence at
  the time when the appellant society was assessed, there was
  no question of carrying forward accumulated losses of the
  amalgamating societies and adjusting them against the profits
  of the appellant society.
F       11. He had drawn our attention to the provisions of Section
  72 and 72A of the Act. He had further submitted that upon
  conjoint reading of Section 72 and 72A of the Act, it is clear
  that the co-operative societies cannot get the benefit of carrying
  forward and setting off accumulated losses if the said societies
G were not in existence. Only in case of a 'company', the benefit
  of set off could be availed by an amalgamated company, if the
  amalgamating company had accumulated losses which could
  have been carried forward and adjusted against the profits of
  the amalgamated company in accordance with the provisions
H of the Act.
  RAJASTHAN R.S.S. & GINNING MILLS FED. LTD. v. DY    345
COMMISSIONER OF INCOME TAX, JAIPUR [ANIL R. DAVE, J.] 1

     12. So as to substantiate his submissions, he had relied        A
upon judgments delivered in the case of The Commissioner
of Income Tax, Lucknow v. Sh. Madho Pd. Jatia 1976(4) SCC
92 and Mis. Baidyanath Ayurved Bhawan (Pvt.) Ltd., Jhansi
v. The Excise Commissioner, U.P. and others 1971(1) SCC
4. He had also relied upon the judgment delivered in the case        B
of Commissioner of Income Tax, Bombay v. Maharashtra
Sugar Mills Ltd., Bombay 1971 (3) SCC 543. Upon perusal
of the aforestated judgments, which support the learned counsel
appearing for the Income Tax authorities, it is clear that the tax
statute should be interpreted very strictly as there is no equity    c
in tax matters and nothing can be read which is not in the
section.

    13. Thus, the learned counsel appearing for the respondent
authorities had submitted that the impugned judgment is just
and correct and therefore, the appeal deserved to be                 0
dismissed.

     14. We had heard the learned counsel and had also
perused records pertaining to the case and had also gone
through the judgments referred to by them, and upon hearing          E
them we are of the view that the judgment delivered by the High
Court is absolutely just and proper.

    . 15. The main submission of the learned counsel appearing
for the appellant society was that the appellant society, being
                                                                     F
an amalgamated society, must get benefit of setting off losses
of the co-operative societies which had been amalgamated into
the appellant society. According to him 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 of the amalgamating societies            G
should have been permitted to be adjusted or set off against
the profits of 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            H
    346     SUPREME COURT REPORTS                       [2014] 7 S.C.R.
                                            "' '
A and therefore, right of the amalgamating societies with regard
  to getting their losses carried-fo!Ward •ahd set off against the
  profits of the amalgamated society would continue .
                                        .   i-··   '\

       16. We are not in agreement with the submissions made
B by the learned counsel appearing for the appellant for the
  reason that for the purpose of getting carried forward losses
  adjusted or set off against the profits of subsequent years, there
  must be some provision in the Act. If there is no provision, the
  societies which are not in existencacannot get any benefit. The
c losses were suffered by the ~ocieties which were in existence
  at the relevant time and their, existence or legal personality had
  come to an end upon being amalgamated into another society.

       17. The normal principle;is that a non-existent person
  cannot file an income tax· return and therefore, cannot carry
D forward its losses after its existence comes to an end. All those
  four societies, upon their amalgamation into the appellant
  society, had ceased to exist and registration of those societies
  had been cancelled. lnthercircumstances, those societies had
  no right under the provisions of the Act to file a return to get
E their earlier losses adjusted against the income of a different
  legal personality i.e. tfie appellant society.

       18. So far as companies are concerned, there is a specific
  provision in the Acftfi'at :upon amalgamation of one company
F with another, loss~s "tlf tRe amalgamating companies can be
  carried forward aria tne amalgamated company can get those
  losses set off agaifisfitS' profits subject to the provisions of the
  Act. This is permissible'by virtue of Section 72 A of the Act but
  there is no such -prbVisfon in the case of co-operative societies .
                    . ,.   (   •   "1



G        19. It is pertinent to note that such a 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 the relevant time there was no such provision which would
    permit the amalgamating co-operative society to carry forward
H
  RAJASTHAN R.S.S. & GINNING MILLS FED. LTD. v. DY.   347
COMMISSIONER OF INCOME TAX, JAIPUR [ANIL R. DAVE, J.]

and adjust such losses against the profits of the amalgamated         A
co-operative society.

     20. The submission made by the learned counsel
appearing for the appellant with regard to discrimination and
violation of Article 14 of the Constitution of India would also not
                                                                      8
help the appellant, as in our opinion, there is no discrimination.
The societies and companies belong to different classes and
simply because both have a distinct legal personality, it cannot
be said that both must be given tfiesame treatment.

     21_. We agree with the view expressed by the High' Court C
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 D
relevant Assessment Year.

      22. We are also of the view that in all the tax matters one
has to interpret taxation statute strictly. Simply because one
class of legal entities are given some benefit which is               E
specifically stated in the Act does not mean that the legal
entities not referred to in the Act would also get the same
benefit. As stated by this Court on several occasions, there is
no equity in matters of taxation. One cannot read into a section
which has not been specifically provided for and therefore, we        F
do not agree with the submissions of the learned counsel
appearing for the appellant and we are not prepared to read
something in the section which hai; not been provided for. The
judgments referred to hereinabove support the view which we
have expressed here.
                                                                      G
    23. For the reasons stated hereinabove, the appeal is
dismissed with no order as to costs.
Bibhuti Bhushan Bose                              Appeal dismissed.