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TMI Blog1997 (3) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1987-88. The assessee claimed carry forward depreciation of 1986-87 assessment year but as the return for that year was treated as non est under section 139(10) having been filed late, the loss claimed (on account of depreciation claimed) was not considered by the Assessing Officer. On appeal, the CIT(Appeals) held that the assessee's belated submission of return for earlier year would not in any way affect the carry forward of unabsorbed depreciation and investment allowance. According to the CIT (Appeals), it may affect the carry forward of business losses in view of section 80 as amended w.e.f. 1-4-1985 and section 139(10) inducted w.e.f. 1-4-1986. The CIT(Appeals), therefore, directed the Assessing Officer to allow the assessee set off of unabsorbed depreciation and investment allowance of the assessment year 1986-87. The revenue felt aggrieved and preferred the present appeal before the Tribunal. 4. It is argued by the ld. Departmental Representative that under section 139(10) if the return is declared non est then the provisions of the Act will not apply. It is stated that the assessee filed the return of loss in December 1986 for the assessment year 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e prescribed period as per existing provisions will not be denied the benefit of carry forward of loss. The ld. counsel for the assessee supported the order of the CIT(Appeals). 6. We have considered the rival submissions, facts of the case and the material on record including the paper book filed by the assessee's counsel. The assessee filed the return for the assessment year 1986-87 on 26-12-1986. The Assessing Officer sent communication dated 21-9-1987 intimating the assessee as under : " The loss return filed on 26-12-1986 for the assessment year 1986-87 is lodged under section 139(10) of the Income-tax Act. " Section 139(10) provide that: Notwithstanding anything contained in any other provision of the Income-tax Act, 1961, a return of income which shows the total income below the maximum amount which is not chargeable to tax shall be deemed never to have been furnished. Proviso to section 139(10) also mentions exceptions in the case of return of income to which provisions of section 139(10) will not apply. The assessee's case is not covered by the said proviso because the return was filed on 26-12-1986. Therefore, Assessing Officer came to conclusion that for all practi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceeding. Their Lordships of the Gauhati High Court held as under : " Sub-section (10) of section 139 does not make any distinction between positive and negative income. If an assessee wants his loss to be carried forward, then he may take recourse to section 139(3) as it is completely independent of the provisions of section 139(10). This position of law would be very clear from proviso (d) to section 139(10), which speaks that provisions of sub-section (10) shall not apply to a return of loss which has been furnished before 31st day of July of the assessment year relevant to the previous year during which the loss sustained. If the income is below the maximum limit of chargeable income, whether there is loss or not, it will come within the ambit of section 139(10). If this is so, the return showing the loss being filed in the instant case after 31st day of July of the assessment year, could not be deemed to be a return filed by the assessee and on that basis no assessment proceeding would proceed. Therefore, the Tribunal was not justified in holding that the Assessing Officer was justified in initiating the assessment proceedings on the basis of the loss return fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the CIT(Appeals) was against the assessment of income for the assessment year 1987-88. He has no business to give a specific finding about carry forward of investment allowance/depreciation for the assessment year 1986-87 because, the appeal for assessment year 1986-87 was not pending before him and there was no order of assessment for that assessment year, against which appeal could have been filed before the CIT(Appeals). Therefore, in directing the Assessing Officer to set off unabsorbed depreciation and investment allowance for the assessment year 1986-87, the CIT(Appeals) totally went beyond his jurisdiction to decide the issue relating to the assessment year 1986-87, because the appeal for that year was not pending. Since the appeal for the assessment year 1987-88 is pending before the Tribunal we could only decide the issue relating to this particular assessment year 1987-88 and the issue relating to the assessment year 1986-87 cannot be decided because there is no appeal before us relating to that year against any assessment for the assessment year 1986-87. We, therefore, reverse the order of the CIT(Appeals) on this issue and restore the order of the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the purchase price paid to PGF was not at all excessive for the variety of cotton purchased by the assessee. The CIT(Appeals) was satisfied with the contentions of the assessee and came to the conclusion that the Assessing Officer has failed to prove that the payment made to PGF is excessive or unreasonable as compared to the market value of goods. The CIT(Appeals) also stated that the bills of sister concerns to Madurai Coats and Super Spinning Mills proved the assessee's case which showed that the market rate was higher than the rate of purchase from PGF. He, therefore, allowed the assessee's claim. 13. The ld. Departmental Representative argued that the CIT(Appeals) should have seen that the Assessing Officer had clearly established his case for disallowance under section 40A(2)(b) and that the CIT(Appeals) erred in comparing the sale bills issued by PGF to third parties for the purpose of proving that the rate of purchase by the assessee from the said factory was lower. The ld. D.R. argued that the details furnished by the assessee clearly show that it has paid highest amount to PGF than the rates prevailing in the market and as the purchases from PGF are covered under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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