"Profits" and Gains of business or profession" or "capital gains" - Income Tax - 171/CBDT

INSTRUCTION NO 171/CBDT, Dated: May 14, 1970 Section(s) Referred: 139(3) Statute: Income - Tax Act, 1961 Section 139(3) of the I.T.Act, 1961 lays down that a person who has sustained a loss under the head "Profits" and Gains of business or profession" or "capital gains" desires that such loss should be carried forward, he should file such a "loss" return within the time allowed u/s.139(1) of I.T.Act. 2. A question has arisen whether in case of a "loss" return filed beyond the time mentioned in section 139(3), it would be necessary for the ITO to take cognizance of the return and proceed to pass a formal assessment order u/s.143(1)/143(3)/144. 3. The Board are advised that it would not be correct for the ITO to ignore such return and file the proceedings. If such a return of loss has been filed within the time limit prescribed in section 139(4), it would be a valid return and all the provisions of the Act would apply thereto. The ITO would have to complete the assessment proceedings within the time limit u/s.153(1)(a)/(c) and specifically mention in the order that the loss under the head "business" or "capital gains" would not be carried forward. 4. It may be mentioned that the Board in their Instruction No.64.F.NO.13/8/69-ITAII dated 24th June, 1969 had mentioned that not withstanding the "loss" return being filed beyond the time limit mentioned in section 139(3), the unabsorbed depreciation and development rebate can be carried forward. 5. These instructions may be brought to the notice of the officers working in your charge.