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TMI Blog1980 (4) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... two per cent. by his wife Mrs. Brij Rattanlal. In this accounting year 1960, there was a change in the shareholding of the assessee-company. Forty per cent. of the shares came to be held by Mrs. Kanti Grover, wife of Mr. K. K. Grover, the managing director of the assessee-company; 40% of the shares were held by Mrs. Sohan Kapur Grover, the mother of the managing director, and the remaining 20% were held by Mr. S. R. Grover, the father of the managing director. K. K. Grover is the brother-in-law of Rattanlal. In the assessment year 1962-63, which was the first assessment year governed by the provisions of the I.T. Act, 1961, there was an unabsorbed business loss of the assessee-company to the tune of Rs. 17,006. The assessee's declared total income for the assessment year 1962-63, was Rs. 43,026. The assessee claimed that the unabsorbed business loss of the previous year should be carried forward and set-off against the income of the assessee-company of the accounting period relevant to the assessment year 1962-63. The ITO held that having regard to the provisions of s. 79 of the I.T. Act, 1961, the losses brought forward could not be set off against the business profits of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eholding was not effected with a view to avoiding or reducing any liability to tax." Learned counsel appearing on behalf of the Revenue has contended that when s. 79 refers to " a previous year ", those words could not be so construed as to refer only to previous year relevant to an assessment year governed by the provisions of the I.T. Act, 1961, and, according to learned counsel, the words " a previous year " must be construed as meaning any previous year, and those words, therefore, will take in even a previous year relevant to an assessment year under the Indian I.T. Act, 1922. Learned counsel has, therefore contended that though undisputedly the change in the shareholding has taken place in the accounting year 1960, that year will still be a previous year for the purposes of s. 79, and, since, admittedly, the persons who held shares in the assessment year in question were not the same as those who held the shares in the year when the loss occurred, the company would not be entitled to the benefit of setting-off of the carry forward loss of the assessment year 1959-60 or as on December 311, 1958, because, admittedly, the accounting year of the assessee-company was the English ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of s. 72 which dealt with the set-off of losses carried forward from the previous years, and this right to have the losses brought forward from the years prior to the assessment year 1962-63, according to learned counsel, was not dealt with by s. 72 at all but that such a right was really saved by the provisions of s. 6 of the General Clauses Act. In other words, the contention of learned counsel for the assessee is that ss. 70 and 71 dealt with the computation of income of the previous year relevant to the assessment year 1962-63, and there was nothing in s. 72 which showed that it permitted losses brought forward from a year prior to the previous year relevant to the assessment year 1962-63. Learned counsel has contended that there is nothing in the provisions of s. 297(2) of the I.T. Act, 1961, which can be construed as expressly taking away this right which had accrued to it under s. 24(2)(iii) of the Indian I.T. Act, 1922. In support of the proposition that if there is no express provision in s. 297(2) of the I.T. Act, 1961, dealing with any specific matter, in such a case, following the repeal of the Indian I.T. Act, 1922, by the 1961 Act, the provisions of s. 6 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 79 is, therefore, an independent provision which alone will be material in a case where the right to carry forward and set off losses in the case of companies dealt with by that section is claimed by the company. The two other parts of s. 79 are those contained in cls. (a) and (b). These clauses prescribe the conditions which are required to be satisfied if company, which is not a company in which the public are substantially interested and in which a change in the shareholding has taken place in previous year, will be entitled to set off the loss in any year prior to the previous year referred to in s. 79. Under cl. (a), the condition is that on the last day of the previous year, that is to say, the previous year relevant to the assessment year in question, the shares of the company carrying not less than 51% of the voting power should have been beneficially held by the same persons who beneficially held shares of the company carrying not less than 51% of the voting power on the last day of the year or years in which the loss was incurred. The condition prescribed in cl. (b) is that the ITO has to be, satisfied that a change in the shareholding was not effected with a view to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the assessment year governed by the I.T. Act, 1961. Now, the words " previous year " have been defined in s. 3 of the Act. Having regard to the definition of " previous year " in s. 3 of the Act and further, having regard to the known canons of construction and interpretation that where a word or phrase has been used by the Legislature and it has been defined, the meaning of the word or phrase as given in the definition clause has to be given to that word or phrase, unless there is any intention to the contrary indicated, the words " previous year " have to be interpreted with reference to the definition in s. 3. Therefore, normally when the words " previous year are used even in the opening part of s. 79, it has to be assumed that they are used in the same sense in which they have been defined under s. 3. The words " previous year " have a positive connotation in the I.T. Act, and there is nothing in the provisions of s. 79 which indicates that those words were intended to refer to any other year than the previous year as understood for the purposes of the I.T. Act, 1961. One more circumstance which leads us to this conclusion is that there was no provision analogous to s. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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