9911796707
|
Home
Issues: Interpretation of Section 80J(3) of the Income-tax Act, 1961 regarding the timing of claiming deduction under Section 80J.
Analysis: 1. The case involved a reference by the Income-tax Appellate Tribunal, Delhi, Bench "B," regarding the interpretation of Section 80J(3) of the Income-tax Act, 1961. The specific question referred to the High Court was whether the assessee was legally correct in claiming a deduction under Section 80J at any time within a period of seven years from the initial assessment year. 2. The assessee, a private limited company, initially did not claim any deduction under Section 80J in the return for the assessment year 1971-72. However, a revised return was filed later, claiming carry forward and set off of relief under Section 80J for the years 1965-66 to 1969-70 against the income of 1971-72. The Appellate Assistant Commissioner did not accept this claim, stating that no deduction could be made for earlier years if not claimed initially. 3. The Tribunal, on the other hand, held that Section 80J should be construed liberally, allowing the assessee to claim the deduction within seven years from the end of the initial assessment year. The Revenue contended that the Tribunal did not consider the true import of Section 80J(3) and referred to a judgment by the Karnataka High Court for clarification. 4. The Karnataka High Court's judgment emphasized that the right to carry forward and set off under Section 80J(3) arises when there is a profit in the subsequent year, and the loss is computed in the previous year. It highlighted the interplay between Section 80J(1) and (3), stating that the loss must be computed in the previous year for it to be carried forward and set off in the subsequent year. The High Court agreed with this view, ruling in favor of the Revenue and against the assessee. 5. Ultimately, the High Court disposed of the reference, affirming the position that the loss must be computed in the previous year for it to be carried forward and set off under Section 80J(3). The judgment clarified the interrelation between Section 80J(1) and (3) and underscored the importance of proper computation of loss for claiming deductions under the Income-tax Act, 1961.
|
