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Rajasthan R.S.S & Ginning Mills Federation Ltd. v. Deputy Commissioner of Income Tax, Jaipur [SC]

CIVIL APPEAL NO. : 3880 of 2003 DECIDED ON : 29th April, 2014 RAJASTHAN R.S.S. & GINNING MILLS FED. LTD. …APPELLANT DY. COMMISSIONER OF INCOME TAX, JAIPUR. ....RESPONDENT MATTER : Income tax Act, 1961- Section 72- amalgamation of cooperative societies- whether carry forward of loss of the amalgamating societies is available to the amalgamated society- Held, No. BRIEF FACTS: There were four co-operative societies in the State of Rajasthan with substantial shareholding of Government of Rajasthan, which were amalgamated with the appellant society. After the amalgamation of the four co-operative societies into the appellant society, the appellant society wanted to get the accumulated losses of these four societies 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. The assessing officer negatived the appellant’s claim for the reason that the said societies were not in existence after their amalgamation into the appellant society and therefore their accumulated losses could not have been carried forward or adjusted against the profits of the appellant society. DECISION : Appeal Dismissed REASONS : The main submission of the learned counsel appearing for the appellant society was that the appellant society, being 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 learned counsel 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 Income Tax Act, the accumulated losses of the amalgamating societies should have been permitted to be adjusted or set off against the profits of the appellant society. The Court has held that as a normal principle 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 registration of those societies had been cancelled. In that 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. So far as companies are concerned, there is a specific provision in the 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 section 72A of the Act, 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.  
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