1983 (4) TMI 44 - HC - Income Tax

Summary

Issues involved:
The judgment addresses the following Issues:
1. Whether the Tribunal was correct in holding that the Appellate Authority Commissioner (AAC) was justified in denying the carry forward and set off of losses for the assessment years 1972-73 and 1973-74.
2. Whether the assessee is entitled to carry forward and set off losses under the Income-tax Act, 1961.
3. Whether the provisions of section 139 are applicable in proceedings under section 148 read with section 147, and if so, whether the assessee is entitled to carry forward and set off losses under section 80 of the Income-tax Act.

Judgment Details:
The High Court of Madhya Pradesh considered a reference made by the Income-tax Appellate Tribunal regarding the denial of carry forward and set off of losses by the AAC for the assessment years 1972-73 and 1973-74. The Tribunal held that the returns filed by the assessee after receiving notice under section 148 could not be considered as filed under section 139 of the Act. However, the High Court analyzed the provisions of section 80, emphasizing that losses must be determined in pursuance of a return filed under section 139 for carry forward and set off. The Court noted that the returns were filed within the time allowed under section 139(4), enabling the assessee to carry forward the losses. Therefore, the Tribunal's decision was deemed incorrect, and the answer to the first question was against the Revenue.

The Court highlighted that the provisions of section 139(1) and (4) should be read together, allowing an assessee to carry forward losses if returns are filed within the time specified under section 139(4). As the returns in this case were filed within the prescribed time, the losses determined by the Income Tax Officer were considered to be in pursuance of returns filed under section 139. Consequently, the Tribunal's decision to deny the carry forward and set off of losses for the assessment years 1972-73 and 1973-74 was deemed legally incorrect.

The Court concluded by answering the first question in the negative, stating that the Tribunal's decision was against the Revenue. Given this answer, it was deemed unnecessary to address questions two and three. The parties were directed to bear their own costs related to the reference.

Therefore, the High Court of Madhya Pradesh ruled in favor of the assessee, allowing the carry forward and set off of losses for the specified assessment years based on the provisions of the Income-tax Act, 1961.