1991 (8) TMI 15 - HC - Income Tax

Issues Involved:
1. Validity of the return filed by the petitioner on September 30, 1986.
2. Interpretation and application of sub-section (10) of section 139 of the Income-tax Act, 1961.
3. Retrospective application of sub-section (10) of section 139.
4. Petitioner's right to carry forward and set off losses.
5. Legality of the Income-tax Officer's rejection of the petitioner's request for an extension of time.

Issue-wise Detailed Analysis:

1. Validity of the return filed by the petitioner on September 30, 1986:
The petitioner, a co-operative society engaged in sugar manufacturing, filed its return on September 30, 1986, disclosing a loss of Rs. 68,13,996. The return was filed after the time allowed under sub-section (1) of section 139 of the Income-tax Act, 1961, which was June 30, 1986. The petitioner had requested an extension of time until September 30, 1986, citing unavailability of return forms and pending audit reports, but this request was rejected. Consequently, the return filed on September 30, 1986, was treated as non est by the respondent through a letter dated September 29, 1987.

2. Interpretation and application of sub-section (10) of section 139 of the Income-tax Act, 1961:
Sub-section (10) of section 139, introduced retrospectively from April 1, 1986, states that a return of income showing total income below the maximum amount not chargeable to tax shall be deemed never to have been furnished. The proviso lists exceptions, including a return of loss filed before July 31 of the assessment year relevant to the previous year during which the loss was sustained. The court noted that this sub-section begins with a non obstante clause, giving it an overriding effect on other provisions, including sub-section (3) of section 139.

3. Retrospective application of sub-section (10) of section 139:
The petitioner argued that the retrospective application of sub-section (10) from April 1, 1986, should not take away its vested right under the unamended sub-section (3) of section 139. The court held that on the date the Amendment Act came into force on September 10, 1986, there was no valid return filed by the petitioner under sub-section (3) of section 139. Therefore, no right was taken away by the retrospective application of sub-section (10).

4. Petitioner's right to carry forward and set off losses:
The court examined section 80 of the Act, which states that no loss can be carried forward and set off unless determined in pursuance of a return filed within the time allowed under sub-section (1) of section 139 or within such further time as allowed by the Income-tax Officer. Since the petitioner did not file the return within the time allowed under sub-section (1) and the request for an extension was rejected, the petitioner had no right to have the loss determined and carried forward.

5. Legality of the Income-tax Officer's rejection of the petitioner's request for an extension of time:
The rejection of the petitioner's request for an extension of time was not challenged in the writ petition. The court declined to consider the validity of the rejection order, stating that even if the order was bad, the petitioner would not get automatic extension till September 30, 1986.

Conclusion:
The court dismissed the writ petition, holding that the return filed by the petitioner on September 30, 1986, was not valid under sub-section (3) of section 139. The retrospective application of sub-section (10) of section 139 did not take away any vested right of the petitioner. The petitioner had no right to carry forward and set off the losses as the return was not filed within the time allowed under sub-section (1) of section 139 or within such further time as allowed by the Income-tax Officer. The rejection of the extension request by the Income-tax Officer was not questioned in the writ petition, and thus, the court did not consider its validity. The petition was dismissed with no order as to costs.

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