1989 (11) TMI 15 - HC - Income Tax

Summary

Issues:
1. Interpretation of section 139(3) of the Income-tax Act, 1961 regarding the time limit for declaring losses.
2. Entitlement of the assessee to carry forward the loss under the Act as per the Taxation Laws (Amendment) Act, 1970.
3. Impact of the amendment of section 139(1) on the decision regarding carry forward of losses.
4. Consideration of minority judgment in CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518 and the view expressed by Mr. Justice R. S. Pathak in Brij Mohan v. CIT [1979] 120 ITR 1 (SC) in relation to carry forward of losses.
5. Application of section 72 of the Income-tax Act, 1961 for carry forward and set off of business losses.

Detailed Analysis:
1. The judgment pertains to a question of law referred to the High Court by the Tribunal regarding the entitlement of the assessee to carry forward a loss under the Income-tax Act, 1961. The issue arose due to the Income-tax Officer disallowing the claim for carry forward based on the non-filing of the return of income within the time limit specified in section 139(3) of the Act.

2. The Appellate Assistant Commissioner allowed the carry forward of the loss, citing precedents such as CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518 and Presidency Medical Centre (P.) Ltd. v. CIT [1977] 108 ITR 838. The Tribunal upheld this decision despite the amendment of section 139(1) post-1976, stating that the principle laid down in the Presidency Medical Centre case remained valid.

3. The Revenue contended that the decision was not valid based on the minority judgment in CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518 and the view expressed by Mr. Justice R. S. Pathak in Brij Mohan v. CIT [1979] 120 ITR 1 (SC). However, the High Court rejected this argument, emphasizing the applicability of the carry forward of losses post the Taxation Laws (Amendment) Act, 1970.

4. The High Court dismissed the Revenue's reliance on the minority judgment and emphasized that the return was filed within the extended period, as accepted by the Income-tax Officer, aligning with the Supreme Court's stance on considering returns filed within the extended period. The Court reiterated the provisions of section 72 of the Income-tax Act, 1961, which govern the carry forward and set off of business losses.

5. Ultimately, the High Court answered the question in the affirmative, ruling in favor of the assessee's entitlement to carry forward the loss as per the provisions of section 72 of the Act. Both judges, BHAGABATI PRASAD BANERJEE and SUHAS CHANDRA SEN, concurred on this decision, upholding the assessee's right to carry forward the loss for the specified assessment year.