1991 (12) TMI 46 - HC - Income Tax

Summary

Issues:
- Whether the Tribunal was justified in directing the Income-tax Officer to carry forward the loss based on a late-filed return under section 139(4) of the Income-tax Act, 1961?

Detailed Analysis:
The case involved an application under section 256(1) of the Income-tax Act, 1961, where the Revenue sought a direction to the Tribunal to refer a question regarding the justification of carrying forward a loss based on a late-filed return. The assessee, a private limited company, filed its return for the assessment year 1980-81 late, resulting in a net loss. The Assessing Officer initially disallowed the carry forward of the loss due to the late filing. However, the Commissioner of Income-tax (Appeals) and the Tribunal relied on precedents from the Madhya Pradesh High Court and the Calcutta High Court, allowing the carry forward of the loss even for late-filed returns under section 139(4) of the Act.

The pivotal decision in question was the Supreme Court's ruling in CIT v. Kulu Valley Transport Co. P. Ltd. [1970] 77 ITR 518, which established that an assessee filing a return under section 139(4) is entitled to the benefit of carrying forward a loss. The Court analyzed the historical context of relevant sections and observed that the Act's changes did not affect the assessee's right to file a return within the prescribed time for carry forward purposes. The judgment emphasized interpreting taxing statutes favorably towards the assessee when multiple views are possible.

The Court highlighted the provisions of section 139(3) and supported the decisions of various High Courts, including the Madhya Pradesh High Court and the Calcutta High Court, regarding the entitlement of an assessee to carry forward a loss even for late-filed returns. It concluded that the Tribunal's decision aligns with established legal principles and precedents, thereby dismissing the need for a reference to the High Court. The judgment was delivered by Arijit Pasayat, with S. K. Mohanty concurring.

In summary, the judgment reaffirmed the principle that an assessee filing a return under section 139(4) of the Income-tax Act is entitled to the benefit of carrying forward a loss, as established by precedent and supported by the Act's provisions. The Court's detailed analysis of relevant sections and historical context emphasized interpreting tax laws in favor of the assessee when determining entitlements such as loss carry forwards. The judgment ultimately upheld the Tribunal's decision and dismissed the need for a reference to the High Court, concluding the application without costs.