1982 (7) TMI 119 - AT - Income Tax

Summary

Issues:
1. Whether the assessee's loss from film business can be carried forward for set off against future profits.
2. Whether the original return was filed within the prescribed time under section 139(1).
3. Interpretation of the assessment order and the legality of the direction given by the ITO under section 155(1).

Analysis:
1. The appeal was filed by the assessee against the order of the CIT (Appeals) concerning the assessment year 1974-75. The assessee, an individual deriving income from business, suffered a loss in film production business. The ITO of the Film Circle accepted the return and calculated the loss. However, in a subsequent assessment under section 155(1), the ITO stated that the original return was filed beyond the time limit under section 139(3), thus questioning the carry forward of the loss for future set off against profits.

2. The CIT (Appeals) dismissed the appeal, citing discrepancies in the filing date of the original return. The assessee argued that the original return was filed on 8th Nov, 1974, supported by evidence such as the receipt issued by the ITO. The representative for the department contested this, pointing out the date on the duplicate return. The Tribunal noted that in the absence of a reply rejecting the extension of time, it is presumed that the time was granted. Therefore, the return filed on 8th Nov, 1974 was within the time limit, allowing for the carry forward of the loss.

3. The Tribunal found that the ITO's direction to not carry forward the loss was unjustified. They emphasized that the return filed on 8th Nov, 1974, or even if considered filed on 26th Mar, 1976, met the requirements for carrying forward the loss. Citing the decision of the Bombay High Court in Telster Advertising, the Tribunal concluded that the assessee was entitled to carry forward the loss for set off against future profits. Consequently, the Tribunal allowed the appeal and deleted the ITO's direction regarding the loss carry forward.