1995 (5) TMI 88 - AT - Income Tax

Application For Extension Applied To Assessee s Appeal Assessing Officer Carry Forward And Set Off

Summary

Issues:
Validity of return of loss filed for assessment years 1985-86 and 1986-87 for carrying forward of losses.

Analysis:
The appeals consolidated by ITAT MADRAS-D involve the common issue of the validity of return of loss filed for assessment years 1985-86 and 1986-87 for carrying forward of losses. The primary question is whether the returns of loss filed for these years are valid in law for the purpose of carrying forward the losses to subsequent years. The dispute revolves around the applicability of section 139(10) of the IT Act, 1961, which determines the validity of the returns filed after the due date.

For the assessment year 1985-86, the Assessing Officer disallowed the carry forward of loss as the return was not filed in time. Similarly, for the assessment year 1986-87, the return of loss was deemed never to have been furnished due to being filed after the due date as per section 139(10) of the Act. The CIT (Appeals) declined to interfere with the Assessing Officer's decision for the assessment year 1985-86 due to lack of proof regarding the filing within the extended time allowed under section 139.

Regarding the assessment year 1986-87, the CIT (Appeals) rejected the assessee's contention that the return should be deemed filed within the extended time under section 139, as the provisions of section 139(10) were applicable from 1-4-1986. The assessee argued that the loss should be carried over for set off, citing the Board's Circular and the Karnataka High Court decision in a similar case.

The ITAT, after considering the submissions and orders, found that the assessee had applied for extensions of time and the claim was in line with the Board's Circular and legal precedents. Therefore, the ITAT set aside the CIT (Appeals) order for the assessment year 1986-87 and directed the Assessing Officer to allow the carry forward of loss for set off in accordance with the law. However, for the assessment year 1985-86, the ITAT declined to interfere on merits but urged the CIT (Appeals) to verify and rectify the order based on the proof provided by the assessee, ensuring a fair opportunity for the assessee to present evidence.

In conclusion, the appeal for the assessment year 1985-86 was dismissed with an observation for further verification, while the appeal for the assessment year 1986-87 was allowed, directing the carry forward of loss for set off in compliance with the law.