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Issues involved: Assessment orders for the years 1988-89 and 1989-90 assailed on the ground of not giving benefit of carry forward of loss.
Issue 1: Benefit of carry forward of loss The assessee filed income-tax return declaring loss, which was not allowed to be carried forward due to being filed late. A revision under section 264 was filed, emphasizing that the loss declared was carry forward loss of earlier years. The revision was rejected based on the timing of the return filing. An application under section 154 was also made, asserting that statutory benefits cannot be withdrawn. The argument presented was that unabsorbed depreciation and investment allowances were carried forward, not a loss. The court referred to various cases to interpret the provisions of the Income-tax Act, emphasizing that loss should be understood as negative profit. It was noted that there is no obligation to file a return within the time prescribed for carry forward loss and depreciation. The court held that the period of limitation prescribed under section 139(1) is not applicable for carry forward of unabsorbed depreciation and investment allowance. Issue 2: Compliance with statutory provisions The court observed that the assessing authority had levied tax on the income declared in the return without giving the benefit of carry forward of unabsorbed depreciation and investment allowance. It was noted that proceedings under section 148 were not initiated, indicating that the case was not considered as escaped assessment or non-filing of a return. The court directed the Income-tax Officer to amend the assessment order to provide the benefit of carry forward of depreciation and investment allowance as per the observations made. In conclusion, the High Court of Karnataka allowed the writ petitions and directed the Income-tax Officer to amend the assessment order to incorporate the benefit of carry forward of unabsorbed depreciation and investment allowance in accordance with the statutory provisions.
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