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Issues involved:
1. Entitlement to carry forward business loss when return filed pursuant to notice under section 148 of the Income-tax Act, 1961. Detailed Analysis: The case involved a question regarding the entitlement of the assessee to carry forward a business loss when the return was filed following a notice under section 148 of the Income-tax Act, 1961. The Appellate Tribunal found that the assessee did not file a return under section 139(1) but filed a return showing a loss after receiving a notice under section 148. The Assessing Officer disallowed the carry forward of the loss as no return was filed under section 139 and no loss was determined pursuant to any return under section 139. The Commissioner of Income-tax (Appeals) held in favor of the appellant, stating that the return filed falls under section 139(2) and the appellant is entitled to the benefits extended to the taxpayer. The Appellate Tribunal dismissed the departmental appeal, citing decisions of the Madhya Pradesh and Calcutta High Courts, which supported the assessee's entitlement to carry forward the business loss. The main issue for consideration was whether a loss determined after filing a return following a notice under section 148 but within the time specified under section 139(4) could be carried forward for set off. The Tribunal, relying on previous court decisions, held that the assessee was entitled to carry forward the business loss. The senior standing counsel argued that the deeming provision in section 148(1) did not specify that a return filed under the notice would be considered as filed under section 139. However, the court rejected this argument, citing precedents from various High Courts and Supreme Court, which established that a return filed within the time limit under section 139(4) following a notice under section 148 should be deemed as filed under section 139(4) for the purpose of carrying forward losses. The court referred to previous judgments, including a Full Bench decision of the Karnataka High Court, which supported the view that a return filed within the prescribed time under section 139(4) after a notice under section 148 should be considered as filed under section 139(4) for carrying forward losses. The court emphasized that the legal position was well-settled that if a return is filed within the time limit specified under section 139(4) following a notice under section 148, it would be deemed as filed under section 139(4) and the loss determined could be carried forward for set off. The court upheld the view that the return filed pursuant to the notice under section 148 should be treated as filed under section 139(4) and allowed the carry forward of the business loss. In conclusion, the court accepted the assessee's contention and ruled in favor of the assessee, allowing the carry forward of the business loss against the Revenue's appeal. The judgment highlighted the importance of filing returns within the specified time limit under the Income-tax Act to determine the entitlement to carry forward losses for set off purposes.
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