IT:Section 72A provides for setting off losses on amalgamation of companies only. There is no provision in the Income-tax Act, which would permit the amalgamating co-operative society to carry forward and adjust such losses against the profits of the amalgamated co-operative society.
The instant appeal was filed before the Supreme Court on following issue:
Whether the amalgamated society could claim the set-off of losses of amalgamating co-operative societies with its profits?
The Supreme Court held in favour of revenue as under:
1) A non-existent person cannot file an income-tax return and, therefore, cannot carry forward its losses after its existence ends. Societies, upon their amalgamation into the appellant society, had ceased to exist. Thus, those societies had no right under the provisions of the Act to file a return to get their earlier losses adjusted against the income of a different legal personality, i.e., the appellant-society.
2) There is a specific provision in the Act that upon amalgamation of one company with another, losses of the amalgamating companies can be carried forward and the amalgamated company can get those losses set off against its profits. This is permissible by virtue of Section 72 A of the Act but there is no such provision in the case of co-operative societies.
3) Such a provision has been made only with regard to amalgamation of companies and later on similar provisions were made with regard to banks, etc., but at the relevant time, there was no such provision, which would permit the amalgamating co-operative society to carryforward and adjust such losses against the profits of the amalgamated co-operative society.
4) The societies and companies belong to different classes. Simply because both have a distinct legal personality, it could not be said that both ought to have been given the same treatment. In the taxation matters, one has to interpret taxation statute strictly.
5) Simply because one class of legal entities is given some benefit which is specifically stated in the Act does not mean that the legal entities not referred to in the Act would also get the same benefit. Thus, amalgamating co-operative societies are not entitled to carry forward and set off losses against profits of the amalgamated co-operative societies.- Rajasthan R.S.S. & Ginning Mills FED. Ltd. v. Dy. CIT  45 taxmann.com 1 (SC)