1998 (3) TMI 53 - HC - Income Tax

Summary

Issues:
- Assessment of income for the assessment year 1979-80
- Entitlement to claim carry forward and set off of loss from the assessment year 1978-79

Analysis:
The High Court of Madras addressed the questions of law regarding the assessment of income for the assessment year 1979-80 and the entitlement of the assessee to claim carry forward and set off of loss from the assessment year 1978-79. The assessee filed its return for the assessment year 1979-80, seeking adjustment of the loss from the previous year. However, the Income-tax Officer rejected the claim, stating that the assessment for the previous year was not completed within the statutory period. The Commissioner of Income-tax (Appeals) also upheld this decision, emphasizing that since the return for the previous year was filed beyond the time limit, the loss could not be carried forward.

Upon appeal to the Appellate Tribunal, the Tribunal agreed with the Commissioner of Income-tax (Appeals) and dismissed the assessee's appeal. The High Court concurred with the Tribunal's view that the loss from the assessment year 1978-79 could not be carried forward due to the belated filing of the return. The court highlighted that the return was filed after the prescribed time limit, rendering it invalid. As a valid return was a prerequisite for determining the loss under the Income-tax Act, the assessee's claim for carry forward and set off of the loss was deemed inadmissible.

Referring to the decision in CIT v. Dalmia Cement (Bharat) Ltd., the court emphasized that under the Income-tax Act, 1961, the assessee has the right to challenge the amount of loss determined by the Income-tax Officer. However, in the present case, as the assessee did not appeal against the order regarding the return filing for the previous year, the court held that the assessee could not now claim the carry forward of the loss for adjustment in the subsequent year's income. Consequently, the High Court upheld the decision of the Appellate Tribunal, ruling in favor of the Income-tax Department and denying the assessee's claim for carry forward and set off of the loss.

In conclusion, the High Court found no fault in the Tribunal's order, answering both questions of law against the assessee. The judgment emphasized the importance of timely compliance with statutory requirements for claiming adjustments in income tax assessments.