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TMI Blog1976 (8) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 54,390 according to the profit and loss account. The assessee claimed that the unabsorbed losses and allowances should be carried forward and added to the loss of the assessment year 1973-74 and allowed to be carried forward further. The Income-tax Officer was of the opinion that there being a change in the share-holdings of the company, the provisions of s. 79 were attracted. He was also of the opinion that this fact involved reduction of tax liability and, therefore, the claim to carry forward the unabsorbed prior losses and allowances should not be allowed. Consequently, he determined the net loss for the assessment year 1973-74 at Rs. 51,927 only and held that this amount alone could be carried forward to the next assessment year. 3. In the next assessment year 1974-75 also the assessee claimed that the prior losses incurred even before the year of change should be brought forward and set off in addition to the loss determined in the preceding assessment year. The Income-tax Officer found that in this assessment year the assessee had a total income of Rs. 1,97,263. He allowed set off of a sum of Rs. 43,463 only as the loss of the preceding assessment year carried forward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement reduced the losses and improved its performance so as to earn positive income in the subsequent years. In this process there was no attempt on the part of the new share-holders to avoid the payment of tax on any income which would have otherwise attracted tax liability. Coming to the assessment year 1974-75, it was submitted that the Appellate Assistant Commissioner had contradicted himself. If the decision of the Income-tax Officer in the assessment year 1973-74 were only an obiter, the claim of the assessee could not be rejected without a fresh finding for the subsequent assessment year. It was again reiterated that the provisions of the section were applicable only to the year of change and that the past losses could be set off against the profits of the years subsequent to the year of change. For this contention reliance was placed on the history of the legislation regarding the provisions of s. 79 and it was urged that it should be so interpreted as to limit its scope to the year of change. It was contended that if the change could not be said to have been made for the purpose of avoiding or reducing any tax liability in the year of change, the assessee could be allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carrying not less than fifty-one per cent of the voting power on the last day of the year or years in which the loss was incurred or, (ii) the Income Tax Officer is satisfied that the change in the share holding was not effected with a view to avoiding or reducing any liability to tax. In other words, if we put the conditions positively, the assessee would be entitled to carry forward and set off the losses prior to the year of change only if more than 51% of the share holdings continued unchanged or the change in share-holdings was made bonafide. It is not in dispute that the first condition was not satisfied in this case as the entire share-holdings have changed hands. Therefore, the second condition comes into operation and we have to see if the assessee satisfied it. 8. We shall now consider the arguments addressed on the interpretation of s. 79 regarding the application of the second condition. The argument of the assessee was that s. 79 was limited to the year of change and need not be referred for the subsequent assessment years. Two reasons were given in support of this argument. The first was that the words "previous year" occurring three times in s. 79 should carry the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other than the previous year referred to earlier in the section. The real contention of the Revenue is that it is only in the third place that the expression "previous year" could be taken to be as defined in the Act and that in the two first places, being qualified by certain other clauses, the expression should be confined to the year of change even though that year of change is not the previous year as defined in the Act. We are unable to accept this contention, front only it is contrary to the generally accepted maxim that the same expression when used more than once in the same section would have but the same meaning but also because it will do violence to the language of the section. If we should accept the interpretation put by the Revenue, it would strike quite a discordant note as clause(a) which follows the expression "previous year" in the third place again refers to the last day of the previous year, which cannot but refer not only to the previous year as defined in the Act, but also as the year of change. The previous year occurring in the first place, having been qualified as the year of change, it is but natural that the same expression occurring thereafter should a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year for which the loss was first computed. s. 80 provides that no loss which has not been determined in the absence of a return filed under s. 139 shall be carried forward and set off. s. 139 provides for the return of income of the previous year and s. 157 provides that where the income of the previous year is loss the Income-tax Officer shall notify the assessee in writing the amount of loss computed by him for the purpose of carrying forward under ss. 72,73 or 74. From the scheme of the Act it would be apparent that each assessment year is an independent unit in respect of which the loss is to be determined and once such a loss is determined, the assessee is entitled to carry forward and set it off in the succeeding years where the same business is carried on. It has been held by the Supreme Court in the case of Khushal Chand Daga(1) that if the Income-tax Officer fails to notify the loss computed in an assessment year it would not prevent the assessee from having the loss computed in the assessment year in which he seeks to carry it forward and set off against income. Similarly, in the case of Manmohandas(2) it was pointed out that in every assessment year the Income-tax Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of s. 79(b) would be applied only to the year of change and not for the subsequent assessment years. 10. Now applying the second condition to the facts of the case, we find that the Income-tax Officer has proceeded on the opinion that the change was effected with a view to avoiding or reducing the liability to tax without giving any basis or materials for such an opinion. We have carefully gone through the record and we are unable to discover any material on which such a finding could be based. We find that the entire shares were purchased by a group of different persons, who by their own expertise and skill were able to bring the company back from the red and show profit in subsequent assessment year. In the year of change itself there was only a loss. Besides, even though the new share-holders may have had shares in other ventures and incomes thereafter they had not attempted to bring together their other income and add it to that of the assessee company so as to get the benefit of the past losses and thus reduce their tax liability. In the circumstances, therefore, it can hardly be said that the improvement in the affairs of the company by the new share-holders and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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