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Issues:
1. Interpretation of provisions regarding filing of returns showing losses under the Income-tax Act. 2. Determination of whether a return showing losses can be carried forward under section 24(2) of the Income-tax Act. 3. Application of sub-sections (2A) and (3) of section 22 in relation to filing returns showing losses. Analysis: The High Court was tasked with interpreting the provisions of the Income-tax Act concerning the filing of returns showing losses. The case involved the Kulu Valley Transport Co. (P.) Ltd., which had submitted returns in January 1956 for the assessment years 1953-54 and 1954-55, indicating losses of specific amounts. Notably, no notices were served on the assessee under section 22(2) of the Act for the relevant assessment years. The Income-tax Officer rejected the returns due to their belated submission and denied the company the benefit of carrying forward the losses in subsequent assessments. Both the Appellate Assistant Commissioner and the Appellate Tribunal upheld this decision, emphasizing the importance of timely filing under the prescribed period. The crux of the issue revolved around the interpretation of sub-sections (2A) and (3) of section 22 of the Act. The revenue contended that an assessee intending to file a return reflecting losses for carryforward under section 24(2) must adhere to the period specified in the general notice published under sub-section (1). It was argued that sub-section (3), allowing belated filing, did not apply to loss returns filed under sub-section (2A). However, the court noted that the introduction of sub-section (2A) did not explicitly exclude the application of sub-section (3) to loss returns, leading to ambiguity in the legislative intent. In support of the assessee's position, reference was made to a Supreme Court decision and a Bombay High Court ruling. The Supreme Court case highlighted that a return showing income below the taxable limit, filed voluntarily in response to a general notice, was considered valid and could be submitted before assessment without a time limit. Similarly, the Bombay High Court decision affirmed the validity of voluntary loss returns under sub-section (3) even before the introduction of sub-section (2A), emphasizing the assessee's right to file such returns irrespective of specific provisions. Ultimately, the Court analyzed sub-section (2A) and concluded that it did not negate the applicability of sub-section (3) for filing returns before assessment. Drawing parallels to previous judicial decisions, the Court affirmed that the provisions of sub-section (3) allowed for belated returns, including those showing losses, until assessment was conducted. Consequently, the Court answered the referred question affirmatively, granting the assessee the benefit of carrying forward the losses and awarding costs for the reference. In a concurring opinion, Justice H.R. Khanna agreed with the affirmative response to the question posed, solidifying the Court's decision on the interpretation of the relevant provisions of the Income-tax Act.
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