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Kalani Udyog Vs. Income-tax Officer, M-ward - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 201 of 1976 (Old No. 401 of 1973)
Judge
Reported in[1979]117ITR431(MP)
ActsIncome Tax Act, 1961 - Sections 72(1), 73(2), 74(1), 74A(3), 75, 75(1) and 75(2)
AppellantKalani Udyog
Respondentincome-tax Officer, M-ward
Appellant AdvocateChaphekar, Adv.
Respondent AdvocateMathur, Adv.
Cases ReferredK.T. Wire Products v. Union of India
Excerpt:
- - it is well known that in interpreting a taxing statute, literal construction is the only safe guide. factory [1975]101itr658(guj) .in construing an act, like the i......or sub-section (3) of section 74a shall entitle any assessee, being a registered firm, to have its loss carried forward and set off under the provisions of the aforesaid sections.'the language of this section is plain enough. sub-s. (1) of section 75 provides that any loss which cannot be set off against any other income of the firm shall be apportioned between the partners of the firm and they alone shall be entitled to have the amount of the loss set off and carried forward. sub- section (2) negatively provides that nothing contained in sub-section (1) of section 72, sub- section (2) of section 73, sub-section (1) of section 74 or sub-section (3) of section 74a shall entitle an assessee which is a registered firm to have its loss carried forward or set off under the provisions of the.....
Judgment:

G.P. Singh, C.J.

1. This is a reference under Section 256(1) of the I.T. Act, 1961, made by the Income-tax Appellate Tribunal, referring for our answer the following question of law :

'Whether the Tribunal was right in holding that the assessee-firm is not entitled to carry forward and set off the unabsorbed loss of Rs. 60,419 of the earlier years against its income computed in the assessment year 1970-71 for the purpose of levy of tax on such income?'

2. The facts, briefly stated, are that the assessee, M/s. Kalani Udyog, is a registered firm. The relevant assessment year is 1970-71, for which the previous year ended on 31st March, 1970. In the course of assessment, the assessee contended before the ITO that it should be allowed to set off its losses for the years 1968-69 and 1969-70. This was negatived by the ITO. The assessee's appeal was also dismissed by the AAC. The Tribunal also dismissed the appeal filed by the assessee.

3. The relevant statutory provision is Section 75 of the Act, which reads as follows:

'75. Losses of registered firms.--(1) Where the assessee is a registered firm, any loss which cannot be set off against any other income of the firm shall be apportioned between the partners of the firm, and they alone shall be entitled to have the amount of the loss set oS and carried forwa-rd for set off under Sections 70, 71, 72, 73, 74 and 74A.

(2) Nothing contained in Sub-section (1) of Section 72, Sub-section (2) of Section 73, Sub-section (1) of Section 74 or Sub-section (3) of Section 74A shall entitle any assessee, being a registered firm, to have its loss carried forward and set off under the provisions of the aforesaid sections.'

The language of this section is plain enough. Sub-s. (1) of Section 75 provides that any loss which cannot be set off against any other income of the firm shall be apportioned between the partners of the firm and they alone shall be entitled to have the amount of the loss set off and carried forward. Sub- Section (2) negatively provides that nothing contained in Sub-section (1) of Section 72, sub- Section (2) of Section 73, Sub-section (1) of Section 74 or Sub-section (3) of Section 74A shall entitle an assessee which is a registered firm to have its loss carried forward or set off under the provisions of the aforesaid sections. In view of the imperative language of Section 75, it is impossible to accept the contention that the assessee, which is a registered firm, should be allowed t& set off the losses of the previous years in the assessment year 1970-71.

4. The learned counsel for the assessee referred us to Kanga and Palkhi-vala's Income-tax, seventh edn., Vol. I, p. 633, where the learned authors have commented that the other view, for which the assessee contends before us, can be accepted on a liberal construction of the provisions. With great respect, we are unable to agree. Acceptance of the contention raised by the learned counsel for the assessee will do violence to the language of the section. It is well known that in interpreting a taxing statute, literal construction is the only safe guide. Moreover, the language of Section 75 being plain, it is not open to us to adopt the liberal construction suggested by the assessee. The view taken by us is supported by the decisions of Kerala, Bombay, Allahabad and Gujarat High Courts : M. O. Devassia & Co. v. CIT : [1973]90ITR525(Ker) , Ballarpur Collieries Co. v. ClT : [1973]92ITR219(Bom) , K.T. Wire Products v. Union of India : [1973]92ITR459(All) , ClT v. Dhanji Shamji : [1974]97ITR173(Guj) and CIT v. Garden Silk Wvg. Factory : [1975]101ITR658(Guj) . In construing an Act, like the I.T. Act which has an all India application, there should be uniformity of construction as far as possible, and this principle also compels us to reject the construction submitted by the assessee.

5. The learned counsel for the assessee also submitted that the entire loss of Rs. 60,419 is not business loss and that it is partly depreciation loss. The statement of the case, however, proceeds upon the assumption that the whole of it is business loss. Indeed, the Tribunal in its order has made reference only to Section 75, and not to Section 32. Had it been argued before the Tribunal that part of this loss was depreciation loss, Section 32 would have been referred to in the arguments before the Tribunal. Be that as it may, the statement of the case and the question referred to us relate only to the application of Section 75. We are not entitled to travel beyond that and to go into the question whether depreciation loss can be carried forward by a registered firm.

6. For the reasons given above, we answer the question in the affirmative, in favour of the department and against the assessee. There shall, however, be no order as to costs.


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