1986 (2) TMI 97 - AT - Income Tax

Submission Of Return For Losses, Depreciation, Carry Forward And Set Off Of Unabsorbed Depreciation

Summary

Issues:
- Validity of return filed by the assessee after multiple rounds of assessment proceedings
- Carry forward of business loss and long-term capital loss
- Entitlement to carry forward unabsorbed depreciation

Analysis:

The judgment by the Appellate Tribunal ITAT CALCUTTA-D involved an appeal by an assessee-company against the Commissioner (Appeals) regarding the assessment year 1973-74. The main issue revolved around the validity of the return filed by the assessee after a series of assessment proceedings spanning several years. The Tribunal noted the complex history of the assessment proceedings, including the failure of the assessee to file a return within the prescribed timeline under section 139(1) of the Income-tax Act, 1961. Despite various extensions and cancellations of ex parte assessments, the final return was filed on 24-1-1983, which was deemed defective as it lacked audited accounts. The Income Tax Officer (ITO) determined a business loss but disallowed carry forward due to the delayed filing of the return.

The Commissioner (Appeals) upheld the disallowance, stating that the return filed after the prescribed period could not be considered valid. The assessee argued that the notice under section 139(2) remained in effect, making the return valid under section 139(2). However, the Tribunal rejected this argument, emphasizing that the ITO's discretion to extend the return filing date does not override the statutory time limit for assessment under section 153 of the Act. The Tribunal clarified that the satisfaction of the ITO under sections 144 and 146 cannot extend the time limit for filing a valid return under section 139.

Regarding the carry forward of losses, the Tribunal held that in the absence of a valid return, the assessee was not entitled to carry forward business loss or long-term capital loss. However, the Tribunal allowed the carry forward of unabsorbed depreciation despite the invalid return, citing legal precedent. The Tribunal directed the ITO to compute the unabsorbed depreciation for the assessee.

In conclusion, the Tribunal partly allowed the appeal, permitting the carry forward of unabsorbed depreciation while upholding the disallowance of business loss and long-term capital loss due to the invalidity of the return filed by the assessee. The judgment clarifies the importance of timely and valid return filing in determining the entitlement to carry forward losses under the Income-tax Act.