1991 (9) TMI 147 - AT - Income Tax

Summary

Issues:
1. Allowance of carry forward losses claimed by the assessee.
2. Validity of the assessment order passed by the assessing officer.
3. Entitlement of the assessee to carry forward business loss based on application for extension of time.

Analysis:
1. The appeal by the revenue challenged the order of the Commissioner (Appeals) allowing the assessee to carry forward the loss determined for the assessment year 1986-87. The revenue contended that the Commissioner erred in directing the carry forward of losses and should have ordered a fresh assessment. The assessee filed the return of loss within the time allowed under section 139(1) and relied on a Board's circular for entitlement to carry forward the loss.

2. The assessing officer passed an order under section 143(1) but issued a notice under section 143(2) for assessment years 1986-87 and 1987-88. The Commissioner (Appeals) determined that the order was actually under section 143(3) and entertained the appeal. The Commissioner relied on Circular No. 469, holding that the loss for the assessment year should be allowed to be carried forward.

3. The Tribunal upheld the order of the Commissioner (Appeals) based on the Board's circular. The revenue's plea to set aside the assessment order for verification of the extension of time claim was rejected. The Tribunal referenced a case where an assessee was allowed to carry forward business loss when an application for extension of time was made but not responded to by the Income-tax Officer. Citing legal precedents, the Tribunal concluded that the assessee filed the return of loss within the prescribed time and was entitled to the loss for the assessment year 1986-87. The appeal was dismissed.