1. This is a reference under S. 61(1) of the Bombay Sales Tax Act, 1959 (hereinafter referred to as 'the 1959 Act') made at the instance of the Commissioner of Sales Tax.
2. The respondents are the transferees of the business of one M/s. Tirathram Kashmirilal, a partnership firm. The said firm was registered as a dealer under the Bombay Sales Tax Act, 1953 (hereinafter referred to as 'the 1953 Act'). Thereafter, the partners of the said firm formed a private limited company with the object of taking over the business of the said firm and accordingly, on November 1, 1959 the ownership of the business of the said firm was entirely transferred to the respondents. The respondents thereafter applied for within the prescribed period and obtained a registration certificate under the 1953 Act. The assets of the business of the said firm taken over by the respondents included certain stock of goods which was purchased by the said firm both from registered dealers and unregistered dealers. In respect of the goods so purchased from registered dealers, the said firm had paid to the vendors of the said goods the amount which the said vendors would have to pay to the Govt. by way of sales tax and general sales tax, and in the case of goods purchased from unregistered dealers, the said firm had paid purchase tax to the Government. The 1953 Act, levied sales tax, general sales tax and purchase tax, the levy of sales tax being provided for by S. 8, of general sales tax by S. 9 and of purchase tax by S. 10 thereof. Under S. 8 a dealer became liable to pay sales tax on his turnover of sales of goods after deducting from such turnover certain sales of goods specified in that section. The relevant portion of S. 8 of the 1953 Act read as follows :-
'8. Levy of sales tax :
Subject to the provisions of S. 7, there shall be levied a sales tax on the turnover of sales of goods specified in column 1 of Schedule B at the rate, if any, specified against them in column 2 of the said Schedule, after deducting from such turnover -
(a) sales of goods -
(i) which have been purchased from a registered dealer on or after the appointed day, or
(ii) on the purchase of which the dealer has paid or is liable to pay the purchase tax :
Provided that the goods have not been processed or altered in any manner after such purchase'.
Under S. 9 of the 1953 Act general sales tax was levied on the turnover of sales of goods specified in Schedule B to that Act. There were certain provisions in this section providing for cases in which general sales tax was not to be levied or levied at a lower rate. We are not concerned with those provisions. Under S. 10 of the 1953 Act purchase tax was levied on the turnover of purchases of goods specified in Schedule B to that Act in cases, inter alia, where such goods were purchased from a person who was not a registered dealer.
3. In order to ensure that a transferee of the business of a registered dealer would get the same benefits in his assessment with respect to sales tax by becoming entitled to claim the same deductions as his transferor could have done in respect of purchases made by him, R. 16(2) of the Bombay Sales Tax (Exemptions, Set-off and Composition) Rules, 1954 (hereinafter referred to as 'the 1954 Rules'), provided as follows :-
'Where a dealer liable to pay tax transfers the ownership of the whole or part of his business, the stock of goods transferred along with such business shall not, for the purpose of S. 8, be deemed to be purchased by the transferee from the transferor and the original purchase of such good by the transferor shall for the purpose of the said section be deemed to be the purchase made by the transferee'.
In order to provide a dealer with relief in addition to those granted, inter alia, by Ss. 8, 9 and 10 of the 1953 Act, and also to provide a dealer with relief in cases where he had paid purchase tax to the Government or had paid to his vendors the amount of tax which his vendors would be liable to pay to the Government, S. 18B of the 1953 Act conferred upon the State Government the power to make Rules providing for a drawback, set-off or refund in respect of taxes and amounts so paid. The Rules relating to the grant of such drawback, set-off or refund are to be found in Rules 11 and 11A of the 1954 Rules. In order to ensure that these benefits would also be available to a transferee of a registered dealer just as such transferee was entitled to the benefit of deductions allowed under S. 8 of the 1953 Act by reason of the said R. 16(2) of the 1954, Rules, R. 11AA was made. This Rule provided as follows :-
'11AA. Grant of drawback, of drawback, set-off or refund to transferee : Where any dealer, who is required to maintain a register in Form (10) under sub-R. 11 or sub-R. (3) of R. 11A, transfers the ownership of his entire business and where the provisions of S. 26 of the Act apply to such transfer then in respect of the purchases of such goods as have been entered in the register in Form (10) and transferred to the transferee on the date of such transfer a drawback, set-off or refund under sub-Rr. (1) and (2) of R. 11 and sub-R. (1) of R. 11A shall be granted to the transferee in the same manner in which if would have been granted to such dealer in the absence of such transfer;
Provided that such transferee is a registered dealer on the date of such transfer or has applied for registration or obtained a certificate of registration Within the time specified in sub-S. (1) or prescribed under sub-S. (2) of S. 26 of the, as the case may be'.
Under R. 11AA a transferee of the business of a registered dealer became entitled to a drawback, set-off or refund under sub-Rr. (1) and (2) of R. 11 and sub-R. (1) of R. 11A of the 1954 Rules. In this reference we are concerned only with the set-off under R. 11(2) which granted this relief in assessing the general sale tax payable by a registered dealer
4. By virtue of the provision of the said Rr. 11AA and 16(2) of the 1954 Rules for the assessment period November 1, 1959 to December 31, 1959 the respondents were allowed deductions under S. 8 of the 1953 Act on the turnover of sales of goods purchased by the said firm from registered dealers and also from unregistered dealers in case where the said firm had paid tax in respect of the said goods as also a set-off under R. 11AA in respect of amount collected as taxes by the vendors of the goods from the said firm.
5. On January 1 1960 the Bombay Sales Tax Act, 1959 came into force and the 1953 Act stood repealed. On the date the 1959 Act came into force namely January 1, 1960 the respondents had in stock part of the stock taken over by them from the transferor and they made further sales therefrom during the period from January 1, 1960 to March 31, 1960. In respect of the said period of assessment the respondents made a claim for set-off based on the provisions of R. 40(2) of the Bombay Sales Tax Rules, 1959 (hereinafter referred to as 'the 1959 Rules'). The Sales Tax Officer granted to the respondents the set-off claimed by them by his assessment order dated October 18, 1962. The Assistant Commissioner of Sales Tax, however, adopted suo motu revision proceedings on the ground that the said set-off had been wrongly allowed and by his order dated March 18, 1963 disallowed the said set-off. The respondents thereafter filed a revision application before the Tribunal and the Tribunal upholding the contentions of the respondents set aside the order of the Assistant Commissioner of Sales Tax.
6. At the instance of the Commissioner of Sales Tax the tribunal has referred the following question to us :-
'Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that for the purpose of Rr. 40 (2) (a) and (b) of the Bombay Sales Tax Rules, 1959, as result of fiction of R. 11AA of the Bombay Sales Tax (Exemption, Set-off and Composition) Rules, 1954, it is the respondent who shall be deemed to have paid the tax on the purchases of goods remaining on hand as of 1-1-1960 and therefore, he is entitled he is entitled to the benefit of drawback set-off of the tax paid in respect of stock of goods held on 1-1-1960'.
In our opinion, this question does not bring out the real controversy the parties and the question of law which really arose for determination of the Tribunal and was determined by it. We accordingly reframe the question submitted to us as follows :-
'Whether on the facts and in the circumstances of the case the Tribunal was justified in law in holding that for the purpose of clauses (a) and (b) of sub-R. (2) of R. 40 of the Bombay Sales Tax Rules, 1959, by reason of the legal fiction created by R. 11AA and sub-R. (2) of R. 16 of the Bombay Sales Tax (Exemption. Set-off and Composition) Rules, 1954, the respondents should be deemed to have paid the tax on the purchase of goods remaining in stock in with them on January 1, 1960 as also should be deemed to have paid to the vendors of goods the amounts by way of tax payable by the vendors to the Government on other goods also remaining in stock on January 1, 1960 and had, therefore, become entitled to a drawback, set-off or refund in respect of the tax and amounts so deemed to have been paid by them in respect of such goods which had in fact been purchased by their transferors and formed part of the stock transferred by the said transferors to the respondents along with the ownership of the business of the transferors on November 1, 1959'.
7. For a proper understanding of sub-R. (2) of R. 40 of the 1959 Rules, it is necessary also to note the provisions of sub-R. (1) thereof. Sub-Rr. (1) and (2) of R. 40 of the 1959 Rules provide as follows :
'40. Drawback, set-off or refund of tax for goods in stock on the appointed day :-
(1) Where a Registered dealer (hereinafter referred to in this rule as 'the assessee') becomes liable to pay tax under the Act from the appointed day by reason of his turnover of purchases having exceeded during the year ending on the 31st March, 1959 or before the appointed day during the year commencing on the 1st April, 1959 the relevant limits specified in sub-s. (4) of S. 3 and the assessee holds in stock on the appointed day goods described in Schedule C, D, or E, which were purchased by him before the appointed day (hereinafter referred to in this rule as 'the goods'), then if the assessee
(a) has resold the said goods within 15 months from the appointed day, or
(b) has despatched on or after the appointed day the said goods, without making any sale thereof, to a destination outside the State of Maharashtra for resale,
the Commissioner shall, in assessing the tax payable by the assessee, for any period, grant him a drawback, set-off or, as the case may be, refund of such amount as may be admissible to him in accordance with sub-R. (2) to (5) of this rule.
(2)(a) Where the said goods were purchased by the assessee from a dealer registered under any earlier law and on such purchase that dealer has recovered from the assessee any tax under such earlier law, or
(b) Where on the purchase of the said goods the assessee has paid under any earlier law any purchase tax or any tax payable by him by reason of the addition of the purchase price of the said goods to his turnover of purchases or, as the case may be, his taxable turnover under such law,
then in the circumstances referred to in clause (a) of sub-R. (1), the assessee shall be entitled to a drawback, set-off or refund of the whole of the amount so recovered or the amount of the tax so paid'.
8. There in no dispute that for the purpose of the said sub-R. (2) the respondents are the assessees as defined in the said sub-R. (1) or that they had complied with the other conditions specified in the said sub-R. (1) and that the goods in question were of the description specified in the said sub-R. (1). What was, however, submitted before us by Mr. Dada, learned counsel for the Department, was that the respondents were not the purchases of the said goods, because the said firm and though under S. 8 of the 1953 Act read with R. 16(2) of the 1954 Rules the respondents might have been entitled to a deduction in respect of resales of these goods and under R. 11(2) read with R. 11A of the 1954 Rules entitled to a drawback, set-off or refund in respect of these resales, the same position did not continue after the coming into being of the 1959 Act, and thus they could not avail themselves of the benefit of the character with which they were invested by R. 11AA and 16(2) of the 1954 Rules. Mr. Dada further submitted that the benefit of the artificial character of the respondents as the purchasers of the side goods by reason of the provisions of R, 11AA of the 1954 Rules was only for the grant of a drawback, set-off or refund under Rr. 11(1) and (2) and 11A(1) of the 1954 Rules and that similarly the legal fiction created by R. 16(2) of the 1954 Rules was for the purpose of S. 8 of the 1953 Act only and that in their assessment under the 1959 Act the respondents could not claim the benefit of the character with which they were invested by R. 11AA of the 1954 Rules or the legal fiction created by R. 16(2) thereof. We will now examine the correctness of these submissions.
9. We will first deal with R. 16(2) of the 1954 Rules. Under that Rule a legal fiction is created whereby the goods purchased by a transferor were for the purpose of S. 8 of the 1953 Act, to be deemed to be the goods purchased by the transferee. Thus, by reason of this legal fiction the transferee took over the character with which his transferor was clothed. It is true that the goods in question were, in fact, not purchased by the respondents, but the respondents being the transferees are by a legal fiction to be considered as if they had in fact as also in law purchased the said goods. The effect of the legal fiction created by a deeming provision, as it is called, cannot be better stated than in the words of Lord Asquith in East End Dwellings Co. Ltd. vs. Funsbury Borough Council. In that case Lord Asquith said :-
'If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs, it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs.'
Mr. Dada, however, submitted that the fiction created by R. 16(2) of the 1954 Rules was only for the purpose of S. 8 of the 1953 Act and whatever benefit this section conferred upon the respondents should not be taken into account after the said Act was repealed. In support of this submission Mr. Dada cited the decision of the Supreme Court in Bengal Immunity Co. Ltd. vs. The State of Bihar to show that a legal fiction is to be limited for the purpose for which it is created and should not be extended beyond that legitimate field. Mr. Dada urged that to permit the respondents on the basis of this legal fiction to get a set-off under the 1959 Rules was to extend this fiction beyond its legitimate field. We are unable to accept this submission. The purpose of S. 8 of the 1953 Act for which the legal fiction was created in R. 16(2) the 1954 Rules was to enable a transferee to get a deduction in respect of re-sales made by him of goods purchased by his transferor. Thus, the purpose was to grant relief to a transferee in his assessment to sales-tax by way of deduction from his turnover.
Dated the 3rd February 1976 :-
10. At this stage it will also be convenient to consider further submission of Mr. Dada that though R. 16(2) of the 1954 Rules might have created a legal fiction, the provisions of R. 11AA thereof did not have that effect, and also to deal with the purpose for which R. 11AA was made. In support of this submission Mr. Dada relied upon the difference in the language used in R. 16(2) and 11AA of the 1954 Rules. In particular, Mr. Dada placed emphasis upon the absence of the words '..... shall ..... be deemed to be the purchase made by the transferee', which occur in R. 16(2) from R. 11AA of the 1954 Rules. According to Mr. Dada had the intention of the Rule making authority been to create a legal fiction in R. 11AA, the same or similar language would have been adopted and the fact that it was not, shows that there was no such intention. We do not find it possible to accept this submission. In order to ascertain whether a statutory provision creates a legal fiction or not, what one has to see is not the language used but the effect of the language and whether the effect is to make a non-existent state of affairs exist or in the words of Lord Asquith, to treat an imaginary state of affairs as real. So long as this is the effect achieved, it is immaterial what the words used are. A variety of expressions have been used for the purpose of creating a legal fiction, the most common being 'shall be deemed to be'. We have several instances of legal fiction which has been created by using the words 'as if'. (see State of Madhya Pradesh vs. A. K. Jain & other). It has also been created by definition clause by using the word 'includes', for when a definition uses that word, it dies usually to enlarge the meaning of the words or phrases occurring in the body of the of the statute and, therefore, those words and must be construed as comprehending not only such things as they signify according to their natural import but also those things which the definition clause declares that they shall include. (see Dilworth vs. Commissioner of Stamps, and Chori Ouso vs. Sassoon Helegua. What we have thus really to do is to ascertain the effect of the language used in R. 11AA of the 1954 Rules. If the language used leads us to treat or consider the transferee as if he was the purchaser, that is, if it makes transferee step into the shoes of the transferor by a fiction of law so as to make him, for the purpose of purchases made by the transferor, the purchaser of the same goods from the transferor's vendors, the effect would be to create a legal fiction, and this is precisely what R. 11AA of the 1954 Rules does by providing that' a drawback, set-off or refund under sub-R. (1) and (2) or R. 11 and sub-R. (1) of R. 11A shall be granted to the transferee in the same manner in which it would have been granted to such dealer in the absence of such transfer'. The words emphasized by us really mean nothing else than in the same manner as if he was the transferor, that is, the actual purchaser. We must next consider the purpose for which the legal fiction in R. 11AA was created. The purpose was to enable the transferee of a business to obtain the same reliefs by way of drawback, set-off or refund provided for by sub-Rr. (1) and (2) of R. 11 and sub-R. (1) R. 11A of the 1954 Rules in his assessment as the transferor would have been entitled to had he not transferred his business. The drawback set-off or refund provided for by the said R. 11(1) and (2) and 11A(1) are reliefs in taxation. The relief is of the same type as that granted in respect of assessment to sales tax in very much the same way as relief granted by R. 16(2) of the 1954 Rules. The purpose, therefore, of both R. 11AA and R. 16(2) of the 1954 Rules was the same, namely, to give relief by way of drawback, set-off or refund or deduction to dealers in their assessments to sales tax, general sales tax and purchase tax which they would otherwise be liable to pay under the 1953 Act.
11. The next question which falls to be considered is whether this purpose became extinguished on the repeal of the 1953 Act and the coming into force of the 1959 Act and whether by applying this legal fiction to a claim of set-off under R. 40(2) of the 1959 Rules, the Court would be extending this legal fiction beyond its legitimate field. For ascertaining this question we must consider first the object with which the 1959 Act was enacted. Before coming into force of the 1959 Act, there were eight different Sales Tax Acts in the State of Bombay (excluding the transferred territories), there was in force the Bombay Sales Tax, 1953, with subsidiary sales tax legislations in the form of the Bombay Sales of Intoxicants Taxation Act, 1953 and the Bombay Sales Tax Lows (Special Exemptions) Act, 1957. In the Marathwada areas, which became merged with the recoganized State of Bombay, there was in force Hyderabad General Sales Tax Act, 1950. In the Vidarbha areas of C.P. and Berar, which become merged with the recognised State of Bombay, there was in force the Central Provinces and Berar Sales Tax Act, 1947, together with a subsidiary legislation viz.., the Central Provinces and Berar Sales of Lubricants Taxation Act, 1938. In the State of Saurashtra, which became merged with the reorganized State of Bombay, there was in force the Saurashtra Sales Tax Ordinance, 1950 and in the Kutch area of the State of Saurashtra, there was in force of Central Provinces and Berar Sales Tax Act, 1947,as extended to that area. The different Sales Tax laws prevailing in different parts of the State could not and did not work for administrative convenience. Accordingly, it was decided to consolidate these different Acts and have a uniform Sales Tax Act for the whole of the reorganized State. This was achieved by the enactment of the 1959 Act. This Act was not intended to wipe out all exiting Sales Tax laws and to bring into being something totally and entirely new in the way of Sales Tax legislation, and the preamble to the 1959 Act expressly states that it is a Consolidating and Amending Act. As pointed out in Craies on Statute Law, Seventh Edition, on page 59, the object of a Consolidating Act is to codify or consolidate in one Act the provisions contained in a number of statutes. A Consolidating and Amending Act is, however, not a statute which merely codifies the existing law, but in addition to so codifying also amends and alters it. But, it does not totally wipe out the effect of all the previous laws. That the Legislature intended to give continuity to the benefits which were enjoyed under the Acts repealed by the 1959 Act referred to in the 1959 Act and the 1959 Rules as the earlier laws, is shown by S. 76 to 79 by the 1959 Act, s. 76 repeals all the earlier Sales Tax laws in force in the Reorganised State of Bombay which we have enumerated above S. 77 is a saving Section and provides for continuance of certain provisions of the earlier laws and registration certificates etc., issued thereunder. Under Section 77 (1) (b) of the 1959 Act, registration certificates issued under any of the earlier laws and in force before the date on which the 1959 Act came into force, viz. January 1, 1960, continued in force after that date and were to be deemed to be certificates of registration under the 1959 Act, and where a registered dealer had already made an application before January 1, 1960 for a Licence, Authorization could have been granted to him under the provisions of the 1959 Act, the registration certificate was also to be deemed on January 1,1960 to be a Licence Authorization or Recognition issued under the 1959 Act. This validity of the registration certificate was to continue for one month to enable the dealer to make a fresh application under the 1959 Act. A Recognition in force immediately before January 1, 1960, if not inconsistent with the provisions of the 1959 Act, was to continue under the 1959 Act for a period of six months or until a fresh certificate was issued, whichever was earlier. We are not concerned in this Reference with the provision of Ss. 78 and 79 of the 1959 Act. It will thus be seen that the enactment of the 1959 Act was not intended to cancel out everything that had been done under the earlier laws or by one stroke to deprive the dealers of the privileges and benefits which they enjoyed under the earlier laws. So far as the point directly in question before us is concerned, under S. 77(1) (a) of the 1959 Act all the earlier laws and all rules, regulations, order, notifications, forms and notices issued under those laws and in force immediately before January 1, 1960, continued, subject to the provisions of S. 42 to have effect for the purposes of, inter alia, a refund or set-off of any tax, or the grant of a drawback in respect thereof S. 42 of the 1959 Act expressly empowers the State Government to make rules providing for the grant of a drawback, set-off or refund also in respect of the tax paid or levied or leviable under any earlier law. The relevant provisions of that section are as follows :-
'42 Draw-back, set-off refund etc.
The State Government may by rules provide that :-
(a) in such circumstance and subject to such conditions as may be specified in the rules a drawback, set-off or refund of the whole or any part of the tax -
(i) paid or levied or leviable under any earlier law in respect of any earlier sales or purchases of goods which are held in stock by a dealer at the commencement of this Act, be granted to such dealer, ......
It was in pursuance of this provision that sub-R. (2) of R. 40 of the 1959 Rules came to made the State Government. The object for which this sub-rule was made was not to deprive dealers of the relief which they would have got under the earlier law in respect of purchases and sales made by them. This sub-rule deals with a case where while purchasing goods from a registered dealer under any earlier law that dealer has recovered from the assessee any tax under such earlier law, and where in respect of such purchase tax or any tax payable by him by reason of the addition of the purchase price of the said goods to his turnover of purchases or his taxable turnover under such law. The important words in the said sub-R. (2) of R. 40 are the opening words of clause (a) thereof. They show that what is required under R. 40(a) of the 1959 Rules is a purchase made while an earlier law was in force and that an amount was paid. by the way of tax by the purchaser under the earlier law or was paid by him to his vendor by way of tax collected from him by his vendor. Thus transaction to be looked at for purpose of granting to an assessee relief by way of a drawback, set-off or refund in his assessment under the 1959 Act is the transaction which had been effected and completed under an earlier law. If the transaction is to be considered from the point of the earlier law, then it can be considered in this light in all its aspects. It, therefore, follows that the purchase, which is referred to in sub-R. (2) of R. 40 of the 1959 Rules, must be a purchase within meaning of the earlier law. Now, what would be a purchase under the earlier law When B purchases goods from A, it certainly would be a purchase, because it is a purchase of goods made directly by B from A. In addition to this, there is another type of purchase provided for by the earlier law, namely a fictional purchase from the original vendor by the transferee of the business of the actual purchaser by reason of the provisions of R. 11AA and 16(2) of the 1954 Rules. It is not if the 1959 Act does not itself treat the transferee of a business as fiction only the actual purchaser in case of purchases made by his transferor. Under the proviso to sub-s. (6) of S. 19 of the 1959 Act where a transferee in whole or in part of the business of a registered dealer resells any goods purchased by his transferor while carrying on that business, the transferee becomes entitled to the same deductions had the resale been effected by the transferor himself. Thus the notion of the fictional purchase is not something alien to the 1959 Act. It is available to all transferees prior to January 1, 1960 in respect of resales made by them after January 1, 1960 of goods purchased by the transferors during the operation of the earlier law. It is also available to all transferees after January 1, 1960 in respect of resales made by them of the goods purchased by the transferors prior to January 1, 1960. It is equally available in cases of resales made by those who become the transferees of business after January 1, 1960 of the goods purchased by their transferors after the coming into force of the 1959 Act. We are unable to see any such lacuna in the 1959 Act as has been canvassed by learned Counsel for the Department. It is contrary to the harmonious construction of statutes, particularly of those which are consolidating and amending statutes, to say that where a rule was enacted in pursuance of the rule-making power conferred by the 1959 Act especially in order to give relief in cases of purchases of goods under the earlier law, it should not be available to the transferee of the business of such purchasers, where such relief was available under the earlier law and is available under the 1959 Act. It should also be noted that in the case of transfer of a business R. 43AA of the 1959 Rules grants a relief by way of drawback, set-off or refund to transferee of business. The words used in R. 43AA viz '..... a set-off, drawback or refund under R. 40, 41, 41A, 42A or 43 as the case may be shall be granted to such person in the same manner in which it would have been granted to the original dealer had he continued in the business' are in pari materia with those used in R. 11AA of the 1954 Rules.
12. Mr. Dada also relied upon our judgment in Commissioner of Sale Tax vs. Mahendra Owen Ltd. to show that no set-off under the 1959 Act would be allowed to the respondents. This judgment is reported in 1975 Current Tax Reporter 52. Even though it is so reported, we have thought it advisable to give reference to the number of this case and the dates on which it was decided, inasmuch as on a perusal of the judgment as reported we have found a number of in inaccuracies, omissions and mistakes some of them material. We are, therefore, unable to place any reliance upon the text of the judgment as reported, but preferred to look at our own original judgment, relying upon this decision, Mr. Dada submitted that the right of set-off under the 1953 Act or the Rules thereunder was not a vested right did not survive the repeal of that Act. We are unable to see any relevance of what we have decided in that case to the question before us . In that case, the admitted position was that a particular set-off to which the assessee was entitled under the 1954 Rules did not find a place in either the 1959 Act or the 1959 Rules. It was further the admitted position that if the assessee had not become entitled to claim the set-off during the period of operation of the 1953 Act, then the relevant provisions which would apply would be those contained in R. 41 of the 1959 Rules under which the assessee was not entitled to claim it. The contention of the assessee was that even though such a set-off had been taken away under the new Act, it nonetheless continued to survive and if the assessee complied with the conditions which would have entitled the assessee to claim the set-off under the 1954 even after the enactment of the new Act, the assessee should be granted the set-off under the 1954 Rules. This contention was rejected by us. In the case before us, the set-off that is claimed by the respondents is not under the 1954 Rules. It is a set off claimed by them under the express provisions of sub-R. (2) of R. 40 of the 1959 Rules and this case falls to be decided purely upon the construction to be placed upon the language of the said R. (2) of R. 40 of the 1959 Rules.
13. In the result, we answer the question as reframed by us in the affirmative. The Applicant will pay to the Respondents the costs of this Reference fixed at Rs. 250/-.