vil Appeal No 1598 NT of 1974
From the Judgment and Order dated 2621971 of the Allahabad High Court in IT Reference No 92 of 1966
CM Lodha NM Tandon and Miss A Subhashini for the Appellant
Dhananjoy Chandrachud Amicus Curiae for the Respondents
The Judgment of the Court was delivered by SABYASACHI MUKHARJI J
This is an appeal from the judgment and order of the High Court of Allahabad dated 26th February 1971
The assessee is a partnership firm which at the relevant time enjoyed the status of a registered firm for the assessment years 1960 61 1961 62 and 1962 63
In the assessment proceedings for the assessment year 1960 61 the assessee suffered a loss of Rs60054 in the speculation business which was to be carried forward for adjustment against speculation profits of future years
For the assess ment year 1961 62 also the assessee had suffered a loss amounting to Rs6839 in 945 speculation business and this was also to be carried forward for adjustment against speculation profits of future years
For the assessment year 1962 63 which is the year with which this appeal is concerned the assessee made a profit of Rs58102 from speculation business
In the assessment proceedings for that year the assessee claimed that a loss of Rs60054 suffered in respect of the assessment year 1960 61 and the loss of Rs6839 suffered in respect 0 the assessment year 1961 62 should be set off against this speculation profit of Rs59102 for this year
If that had been done the speculation profits of the year under consid eration would have been absorbed completely by the losses brought forward from the preceding years
The Income tax Officer however rejected the assessee s claim
He held that as the assessee was a registered firm the losses could be carried forward and set off only by the partners and not by the firm
The appeal by the assessee before the Assistant Appellate Commissioner was dismissed
The assessee went up in appeal to the Tribunal
The Tribunal held that the right to carry forward the losses relating to the assessment years 1960 61 and 1961 62 was governed by the Indian Income tax Act 1922 hereinafter called the 1922 Act  and the section 752 of the Income tax Act 1961 which was applicable to the assessment year 1960 61 had no application in the facts of this case
The Tribunal was of the view that when an Act was passed repealing an earlier enactment it could not be said to supersede any right already accrued under the repealed enactment unless there was something in the repealing Act to indicate that clearly
The Tribunal therefore held that the assessee was entitled to have the losses brought forward from the preceding two years and set off against the profits earned for the year 1962 63 and accordingly allowed the appeal
The revenue sought for reference to the High Court of Allahabad on the following question Whether the assessee is in law entitled to set off of the speculation losses suffered in the assessment years 1960 61 and 1961 62 against the speculation profits of the previous year The High Court considering the provisions of section 75 of 1961 Act came to the conclusion that a right had accrued to the assessee by virtue of 1922 Act which entitled him to have the losses from speculation business in respect of the assessment year 1960 61 and 1961 62 to be carried forward and set off against the profits in speculation busi 946 ness of future years
The High Court was of the view that that was a right which had accrued to it before the 1961 Act was brought into force
The High Court came to the conclusion that by virtue of section 6 of the that right continued to subsist
The High Court therefore was of the view that the Tribunal was fight in holding that the assessee was entitled to set off the specu lation losses suffered in the assessment years 1960 61 and 1961 62 against the speculation profits of the previous year 1962 63
In appeal on behalf of the revenue before us it was contended that the High Court was in error
Our attention was drawn to the provisions of section 242 of 1922 Act which inter alia provided that where any assessee sus tained any loss of profits or gains in any year being a previous year not earlier than the previous year for the assessment for the year ending 31st day of March 1940 in any business profession or vocation and the loss could not be wholly set off under sub section 1 of section 24 of the said Act so much of the loss as was not so set off or the whole loss where the assessee had no other head of income would have been carried forward in the manner indicated therein
So therefore the 1922 Act gave a right to set off speculation losses against speculation profits and to the extent it was unabsorbed it had a fight to carry for ward the losses for the future years to be set off against speculation profits for future years
It was submitted that in a way it was vested right a fight on assessment to set off the losses against the profits of the year in question and if not fully absorbed to carry forward to be set off against the profits of future years
It was submitted on behalf of the revenue that it therefore continued so long as the Act permitted the setting off in that manner
It was however urged that in view of the coming into operation of 1961 Act which came into operation on 1st of April 1962 that fight no longer was there with the assessee
Section 75 of 1961 Act provided an entirely new scheme
It was as follows 75
Losses of registered firms 1 Where the assessee is a regis tered 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 off and carried forward 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 947 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 sec tions
 As a result of sub section 2 of section 75 of the said Act there is prohibition according to the revenue enti tling the assessee being registered firm to have its loss carried forward and set off under the provisions except in the manner indicated in sub section 2 of section 75 of the Act
It was submitted that as the assessment for the year 1962 63 had to be made under the provisions of 1961 Act the assessee could not have the benefit of set off of the car ried forward loss
In support of this contention reliance was placed on the decision of the Allahabad High Court in Commissioner of Income tax Kanpur vs Mangiram Gopi Chand where it was held that a registered firm could so long as the 1922 Act was in force carry forward speculation loss if it could not be set off against specu lation income of the year in question
However the Court observed after coming into force of 1961 Act specific provisions had been made in respect of losses of registered firms and such right of set off of speculation losses was no longer available
The High Court was of the view that the right of a registered firm to set off and carry forward losses under section 242 of the 1922 Act was a substantive right
However where a repealing provision indicated the effect of the repeal on previous matters and provided for the operation of the previous law in part as also the opera tion of the new law in the other part in positive terms the repealing and saving provision could be said to be self contained and excluded the applicability of section 6 according to the Allahabad High Court of the 
Section 2972 of 1961 Act according to the Allahabad High Court must be taken to be a self contained code in respect of the operation of 1922 Act and the rights which might have been created under it
Inasmuch as section 2972 of the 1961 Act did not save said the Allahabad High Court the right if any of a registered firm to set off its speculation losses which have been carried forward against the speculation profits of the firm the right if any created by section 242 could not be said to remain intact after the repeal of the 1922 Act
Speculation losses of years anterior to 1962 63 could not therefore be car ried forward and set off against speculation profits of a registered firm
The Allahabad High Court considering the decision of this Court in State of Punjab vs Mohar Singh  observed that the principle laid down by this Court was that where the repealing provision indicated the effect of repeal on previ 948 ous matters and provided for the operation of the previous law in part and in negative terms as also for the operation of the new law in other part in positive terms the repeal ing and the saving provision could be said to be self con tained Act
While we respectfully agree with the principle applicable in interpreting the application of the Act we are of the opinion that the Allahabad High Court was not fight in the application of that principle in the light of section 2972 of 1961 Act in the aforesaid decision
There is nothing in any of the clauses of subsection 2 of sec tion 297 of the Act which indicates that accrued rights under 1922 Act lapsed in respect of the assessment to be made after coming into operation of 1961 Act
According to the Allahabad High Court in that decision section 2972a provided for completion of assessment in accordance with the old Act where the return was filed before the commencement of the 1961 Act but section 2972b of the Act provided for completion of assessment in accordance with the provi sion of the new Act where the return was filed even in respect of years covered by the 1922 Act after 31st March 1962
Reading section 297 in the manner it did the Allaha bad High Court was of the view that where the provisions of the previous Act stood repealed the set off cannot be given
The Allahabad High Court had it appears no occasion to notice the judgment under appeal
On behalf of the revenue reliance was also placed on a decision of the Calcutta High Court in the case of Reliance Jute Mills Co Ltd vs Commissioner of Income tax West Bengal 1 on the question of carry forward of the loss after the coming into operation of the Finance Act 1955
The principle enunciated therein in our opinion will have no application to the controversy in the present case
Our attention was also drawn by the revenue to the decision of the Kerala High Court in the case of Helen Rubber Indus tries Ltd vs Commissioner of Income Tax Mysore Travan core Cochin and Coorg The Kerala High Court observed that the loss incurred in Travancore in a Part B State by the assessee during ME 1123 which could only have been carried forward for two years in accordance with the provisions of section 322 of the Travancore Income tax Act 1121 could be carried forward beyond those two years for a period of six years in accordance with sections 242 of the Indian Income tax Act 1922 for the assessment year 195 1 52 as the Indian Income tax Act 1922 was applicable for that assessment year and the assessee had the right to carry forward losses in accordance with the provisions of that Act
The High Court had to construe section 3 of the Taxation Laws Part B States Removal of Difficulties Order 1950
This case must also be understood in the back ground of 949 the facts of that case which are different from the instant case with the provisions with which we are concerned
That was not a case of deciding whether the vested right was curtailed and if so to what extent
This Court in Karimtharuvi Tea Estate Ltd vs State of Kerala  observed that it was well settled that the Income tax Act as it stands amended on the first day of April of any financial year must apply to the assessment of the year
Any amendments in that Act which came into force after the first day of April of a financial year would not apply to the assessment for that year even if the assess ment was actually made after the amendments came into force
There the Kerala Surcharge on Taxes Act 1957 having come into force on 1st September 1957 being the date appointed by the Kerala Government under section 13 of the Act and not being retrospective in operation by express intendment or necessary implication could not be made applicable from 1st April 1957
Since the Act was not the law in force on 1st April 1957 no surcharge on agricultural income tax could be levied under that Act in respect of the assessment year 1957 58
That decision had also not dealt with the question of affecting vested rights
In our opinion the right given to the assessee for the assessment year 1961 62 under section 242 of 1922 Act was an accrued right and a vested right
It could have been taken away expressly or by necessary implication
It has not been so done
Neither section 2972b nor any other sub clauses of sub section 2 of section 297 indicates contrary intention of the legislature regarding any vested right of the assessee under the 1922 Act
On the contrary section 6c of the indicates that right should be preserved
Reliance may be placed on the observations of this Court in TS Baliah vs
TS Rangachari Income tax Officer Cen tral Circle VI Madras This Court observed that the provisions of section 52 of the Indian Income tax Act 1922 do not alter the nature or quality of the offence enacted in section 177 of the Indian Penal Code 1860
They merely provide a new course of procedure for what was al ready an offence
There is no repugnancy or inconsistency the two enactments can stand together and they must be treated as cumulative in effect
This Court however ob served that in enacting section 2972 of the Income tax Act 1961 it was not the intention of the Parliament to take away the right of instituting prosecutions in respect of proceedings which were pending at the commencement of the Act
Parliament had not made any detailed provision for the 950 institution of prosecutions in respect of offences under the 1922 Act
Section 6e of the General Clauses Act 1987 applied for the continuation of such proceedings after the repeal of the Indian Income tax Act 1922 and a legal proceeding in respect of an offence committed under the 1922 Act may be instituted after the repeal of the 1922 Act by the 1961 Act
The Court reiterated that before coming to the conclusion that there is a repeal of an earlier enactment by a later enactment by implication the court must be satis fied that the two enactments are so inconsistent or repug nant that these could not stand together and the repeal of the express prior enactment must flow from necessary impli cation of the language of the later enactment
In Commissioner of Income Tax Central Calcutta vs
BP India Ltd the Calcutta High Court was concerned with section 253 of the 1922 Act
It is not necessary to set out in extenso the facts of that case
It suffices to say that the discontinuance of the assessee s business in that case took place on 28th February 1962
It could not be disputed that if the 1961 Act had not come into effect the assessee would have been entitled to get the relief as granted by virtue of section 253 of the 1922 Act
It was observed that on a reading of section 6 of the  it was clear that unless a con trary intention appears the repeal of an Act does not affect any existing right privilege obligation or liabili ty
It is therefore necessary to find out from the provi sions of section 297 of the 1961 Act whichrepeals the 1922 Act whether the old rights and liabilities have been in tended to be destroyed
There was no corresponding provision under the 1961 Act dealing with the type of claims mentioned in sub section 3 or 4 of section 25 of the 1922 Act
It was contended by the revenue that what was not said was destroyed and such intention would be apparent in that case from section 2972h of the 1961 Act
The High Court referred to the 12th Report of the Law Commission and Speaking for the Court one of us Sabyasachi MukharjiJ said that it was not possible to accept the submission for the revenue that whatever was not said was destroyed
The Court reiterated that there must be a manifest intention of Parliament to destroy a right or privilege under the old Act
There is no such provision in the new Act
In the instant case also section 752 dealt with a different scheme of carrying forward of loss but it did not speak of any accrued right
It did not destroy either by express words or by necessary implication the vested right given to an assessee under section 24 2 of the Act of 1922
There fore unless one finds in section 297 or within the four corners of the any intendment express or implied of destroying the rights created by section 242 of 951 carrying forward the losses to set off in subsequent years in case of speculation business that right cannot be said to be destroyed
The fact that the fight created by the operation of section 242 is a vested right cannot in our opinion be disputed
See in this connection the observations of this Court in Gujarat Electricity Board vs Shantilal R Desai  at 587 and Isha Valimohamad  Anr
vs Haji Gulam Mohamad  Haii Dada Trust 1975 1 SCR 720 at 723
Under the Income Tax Act of 1922 the assessee was entitled to carry forward the losses of the speculation business and set off such losses against profits made from that business in future years
The fight of carrying forward and set off accrued to the assessee under the Act of 1922
A right which had accrued and had become vested continued to be capable of being enforced notwithstanding the repeal of the statute under which that fight accrued unless the re pealing statute took away such right expressly or by neces sary implication
This is the effect of section 6 of the 
In this case the savings  provision in the repealing statute is not exhaustive of the rights which are saved or which survive the repeal of the statute under which such rights had accrued
In other words whatever fights are expressly saved by the savings  provision stand saved
But that does not mean that fights which are not saved by the savings  provision are extinguished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted
Rights which have accrued are saved unless they are taken away expressly
This is the principle behind section 6c of the 
The right to carry forward losses which had accrued under the repealed Income tax Act of 1922 is not saved expressly by section 297 of the Income tax Act 1961
But it is not necessary to save a right expressly in order to keep it alive after the repeal of the Old Act of 1922
Section 6c saves accrued rights unless they are taken away by the repealing statute
We do not find any such taking away of the rights by section 297 either expressly or by implica tion
We are therefore of the opinion that the Allahabad High Court was in error in the view it took in the decision in Commissioner of Income tax Kanpur vs Mangiram Gopi Chand supra but the High Court of Allahabad was fight in the judgment under appeal and the question was properly an swered
The assessee in person did not appear at the time of the heating 952 of this appeal
We requested Shri Chandrachud to assist us as amicus curiae
We record that Shri Chandrachud has ren dered very able assistance to us in disposing of this ap peal
This Court records its appreciation of the help ren dered by him
The appeal in the premises fails and is dismissed with costs assessed at Rs2500 which amount should be paid to the amicus curiae
APJ Appeal dis missed


Summary:
The assessee a partnership firm enjoyed the status of a registered firm for the assessment years 1960 61 1961 62 and 1962 63
In the assessment proceedings for the year 1962 63 the assessee claimed that a loss of Rs60054 suf fered in the speculation business in the assessment year 1960 61 and the loss of Rs6839 suffered in the assessment year 1961 62 should be set off against the speculation profit of Rs58102 for the assessment year 1962 63
The Income Tax Officer rejected the assessee s claim holding that as the assessee was a registered firm the losses could be carried forward and set off only by the partners and not by the firm
The appeal by the assessee before the Assistant Appellate Commissioner was dismissed
In the appeal to the Tribunal the Tribunal held that the right to carry forward the losses relating to the as sessment years 1960 61 and 1961 62 was governed by the Indian Income Tax Act 1922 and that section 752 of the Income Tax Act 1961 which was applicable to the assessment year 1960 61 had no application in the facts of this case that when an Act was passed repealing an earlier enactment it could not be said to supersede any right already accrued under the repealed enactment unless there was something in the repealing Act to indicate that clearly and therefore the assessee was entitled to have the losses brought forward from the preceding two years and set off against the profits earned for the year 1962 63
In the Reference the High Court held 1 that a right had 943 accrued to the assessee by virtue of 1922 Act which entitled him to have the losses from speculation business in respect of the assessment year 1960 61 and 1961 62 to be carried forward and set off against the profits in speculation business of future years 2 that was a right which had accrued to it before the 1961 Act was brought into force 3 that by virtue of section 6 of the General Clauses Act that right continued to subsist and 4 that the Tribunal was right in holding that the assessee was entitled to set off the speculation losses suffered in the assessment years 1960 61 and 1961 62 against the speculation profits of the assessment year 1962 63
Dismissing the Appeal of the Revenue HELD 1
The Allahabad High Court was in error in the view it took in the decision in Commissioner of Income Tax Kanpur vs Mangi Ram Gopichand but it was right in the judgment under appeal and the question was properly answered
951 G H 2
The right created by the operation of section 242 of 1922 Act is a vested right
951 A B Gujarat Electricity Board vs Shantilal R Desai  at 587 and Isha Valimohamad  Anr
vs Haji Gulam Mohamad  Haji Dada Trust 1975 1 SCR 720 at 723 referred to
Under the Income Tax Act of 1922 the assessee was entitled to carry forward the losses of the speculation business and set off such losses against profits made from that business in future years
The right of carrying forward and set off accrued to the assessee under the Act of 1922
A right which had accrued and had become vested continued to be capable of being enforced notwithstanding the repeal of the statute under which that right accrued unless the re pealing statute took away such right expressly or by neces sary implication
This is the effect of section 6 of the 
951B D 4
Whatever rights are expressly saved by the savings  provision stand saved
But that does not mean that rights which are not saved by the saving  provision are extin guished or stand ipso facto terminated by the mere fact that a new statute repealing the old statute is enacted
Rights which have accrued are saved unless they are taken away expressly
This is the principle behind section 6c of the 
951E F 944 5
The right to carry forward losses which had ac crued under the repealed Income Tax Act of 1922 is not saved expressly by section 297 of the Income Tax Act 1961
But it is not necessary to save a right expressly in order to keep it alive after the repeal of the Old Act of 1922
Section 6c of the saves accrued rights unless they are taken away by the repealing statute
Taking away of any such rights by section 297 either expressly or by implication is not found
951 F Commissioner of Income tax Kanpur vs Mangiram Gopi Chand  overruled
State of Punjab vs Mohar Singh   Reliance Jute Mills Co Ltd vs Commissioner of Income tax  Helen Rubber Industries Ltd vs Commissioner of Income Tax Mysore Travancore Cochin and Coorg and Karimtharuvi Tea Estate Ltd vs State of Kerala   referred to
TS Baliah vs
TS Rangachari Income tax Officer Central Circle VI
Madras and Commissioner of Income tax Central Calcutta vs
BP India Ltd  followed