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TMI Blog1995 (2) TMI 102X X X X Extracts X X X X X X X X Extracts X X X X ..... n and unabsorbed investment allowance from year to year. However, the Assessing Officer has accepted the returns under section 143(1) in respect of the above three years but declined to carry forward of unabsorbed depreciation and unabsorbed investment allowance. The Assessing Officer while dealing with the assessment for the assessment year 1989-90 was of the view that the assessee was not entitled to carry forward of unabsorbed depreciation and unabsorbed investment allowance since the loss return was filed belatedly. He drew support from the provisions of section 139(3) of the Act, which requires that a person claiming to carry forward of the loss should have filed the return under section 139(1) of the Income-tax Act, 1961. He also reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) Ltd.'s case has drawn a distinction between these two in the following words : " Section 72 provides for carry forward and set off of business losses and sub-section (2) of this section only provides a rule of priority under which set off of business losses shall have statutory preference over carry forward of allowances under section 32(2) of the Act. Even this provision does not speak of 'unabsorbed depreciation' as losses ; but describes it as 'allowances'. Unabsorbed depreciation as an item of allowance which can be carried forward is specifically mentioned in section 32(2) and carry forward of unabsorbed development rebate is provided for in section 32(2)(ii) both the provisions occurring in Chapter IV of the Act. The Act does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erified in the prescribed manner and containing such other particulars as may be prescribed and the provisions of this Act shall apply as if it were a return under sub section (1)." From the plain reading of the above section it is manifest that the filing of the return of income within the time allowed under section 139(1) is a condition precedent for allowing carry forward of business loss or loss under the head 'Capital gains' and not for carry-forward of unabsorbed depreciation or unabsorbed investment allowance. These are governed by the provisions of sections 32 and 33 which form a code by itself. The Assessing Officer is not justified in invoking the provisions of section 139(3) to disallow the claim of the assessee. 4. The Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned income falls below the taxable limit, the return becomes non est and such claims cannot be verified by the Assessing Officer. This provision has disturbed the continuity of assessment records in certain cases. Therefore, the Bill seeks to omit sub-section (10) of section 139 of the Income-tax Act." Thus in the interest of continuity of the assessment records, it can be held that even when the section was in force, the amendment carried out to it with effect from 1-4-1990 including the return of the firm as one of exceptions to section 139(10) must be deemed to be clarificatory in nature. Even otherwise the assessee is entitled to succeed. 5. The CIT (Appeals) erred in holding that the issue before him was not carry forward of unabsor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer disallowed carry forward of unabsorbed depreciation and investment allowance in the assessment years 1986-87 to 1988-89 and therefore the assessee is disentitled to claim the same. This contention cannot be upheld in view of the decision of the Supreme Court in CIT v. Manmohan Das [1966]59 ITR 699 to the following effect : " Whether the loss in any year may be carried forward to the following year and set off against the profits and gains of the subsequent year under section 24(2) has to be determined by the Income-tax Officer who deals with the assessment of the subsequent year. A decision recorded by the Income-tax Officer who computes the loss in the previous year that the loss cannot be set off against the income of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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