2002 (9) TMI 255 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of CIT(A) to adjudicate on carry forward of loss incurred in previous years.
2. Eligibility of loss incurred in AY 1987-88 for carry forward and set-off against income in AY 1990-91.

Issue-wise Detailed Analysis:

1. Jurisdiction of CIT(A):
The revenue contended that the CIT(A) lacked jurisdiction to adjudicate on the carry forward of loss incurred in AY 1987-88 while dealing with an appeal for AY 1990-91. According to the revenue, the grievance regarding the carry forward of loss should have been addressed in the appellate proceedings for AY 1987-88 itself. However, the Tribunal found guidance from the Supreme Court's decision in *CIT v. Manmohan Das [1966] 59 ITR 699*, which held that the determination of whether a loss can be carried forward is to be made by the Assessing Officer dealing with the assessment of the subsequent year. Therefore, the Tribunal concluded that the CIT(A) had the jurisdiction to adjudicate on the carry forward of the loss in the assessment year 1990-91.

2. Eligibility of Loss for Carry Forward and Set-off:
The core issue was whether the loss incurred in AY 1987-88, for which the return was filed beyond the time limit set out in section 139(1), could be carried forward and set off against income in AY 1990-91. The Tribunal examined the provisions of section 80, which, as amended with effect from 1st April 1985, required that for a loss to be carried forward, the return must be filed within the time allowed under section 139(1) or within such further time as may be allowed by the Income-tax Officer. The Tribunal noted that the amendment to section 80 effective from 1st April 1989, which substituted the phrase "time allowed under sub-section (1) of section 139" with "in accordance with the provisions of sub-section (3) of section 139," was merely of a consequential nature and did not alter the requirement that the return must be filed within the specified time.

The Tribunal distinguished the case from the Supreme Court's decision in *CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518* and the Calcutta High Court's decision in *Presidency Medical Centre (P.) Ltd. v. CIT [1977] 108 ITR 838*, which dealt with the pre-amendment law and did not consider the restrictions imposed by the amended section 80. The Tribunal also referred to the Calcutta High Court's decision in *Krishna Chandra Dutta (Cookme) (P.) Ltd. v. CIT [1993] 204 ITR 23*, which clarified that the amendment to section 80 applied to losses arising in assessment years 1985-86 and onwards.

Based on these deliberations, the Tribunal concluded that the assessee was not entitled to carry forward and set off the loss incurred in AY 1987-88, as the return was filed beyond the time limit specified in section 139(1). Consequently, the Tribunal vacated the CIT(A)'s order and restored the Assessing Officer's decision to disallow the carry forward and set off of the loss.

Conclusion:
The Tribunal allowed the revenue's appeal, holding that the loss incurred in AY 1987-88 could not be carried forward and set off against the income of AY 1990-91 due to the belated filing of the return beyond the time limit specified in section 139(1).