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Interpretation of section 22(2A) of the Indian Income-tax Act, 1922 regarding the carry forward of loss for an unregistered firm. Detailed Analysis: The judgment involves a reference under section 66 of the Indian Income-tax Act, 1922, concerning the carry forward of loss for an unregistered firm. The assessee, an unregistered firm, filed a voluntary return for the assessment year 1955-56 showing a loss without being noticed under section 22(2) of the Act. The Income-tax Officer issued a notice under section 23(2) and examined the accounts, stating that the loss return was out of time. The Appellate Assistant Commissioner allowed the appeal, directing the Income-tax Officer to proceed on the basis of the return and compute the correct amount of loss. However, the Income-tax Officer later refused to carry forward the loss, leading to further appeals and disputes. The controversy primarily revolves around the interpretation of section 22(2A) of the Act, which outlines the conditions for carrying forward losses. The section requires the assessee to furnish particulars within the specified time or as allowed by the Income-tax Officer to be entitled to the benefit of carry forward of loss. In this case, the return was filed after the specified time, raising the question of whether further time was allowed by the Income-tax Officer, either expressly or by implication. The High Court analyzed the actions of the Income-tax Officer and the Appellate Assistant Commissioner to determine if further time was impliedly granted. The Court observed that the Income-tax Officer's actions, such as examining the accounts and not summarily rejecting the return, indicated a willingness to consider the return despite the delay. Additionally, the Appellate Assistant Commissioner's order implied that the delay in filing the return was condoned when the notice under section 23(2) was issued. Therefore, the Court inferred that further time was allowed by implication under section 22(2A) for the filing of the return. Furthermore, the Court considered the purpose of the Appellate Assistant Commissioner's order, which directed the Income-tax Officer to compute the loss for carrying it forward. The Court emphasized that the order implied the grant of further time and the necessity to complete the assessment for carrying forward the loss. Since the order was not challenged in appeal, its effect mandated the Income-tax Officer to carry forward the loss for set off against subsequent years' income. In conclusion, the High Court answered the reference in the affirmative, stating that the assessee was entitled to carry forward the loss for the assessment year 1955-56 and set it off against the income for 1959-60. The judgment highlighted the importance of interpreting statutory provisions in line with the actions and orders of tax authorities to uphold the assessee's entitlement to benefits under the Income-tax Act.
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