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TMI Blog1985 (5) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... Act on 23-3-1982 and while computing the income, the ITO had set off the loss of Rs. 47,160 relating to the assessment year 1979-80 against the income for the assessment year 1980-81. While scrutinising the assessment records, the Commissioner noticed that the return for the assessment year 1979-80 declaring a loss was filed on 19-7-1980 as against the due date of 30-6-1979 and there was also no application from the assessee requesting for extension of time for filing the return of income. He was of the opinion that the loss returned for the assessment year 1979-80 did not conform to the statutory requirements of sub-section (3) of section 139 of the Act especially after the addition of the words therein by the Taxation Laws (Amendment) Act, 1970, with effect from 1-4-1971, namely, 'or within such further time which, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, allow'. In view of the specific addition of the abovementioned words to the section, he was of the opinion that the decision of the Supreme Court in CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518 did not apply and since the return declaring a loss was not file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orward and set off of loss of an earlier year was available to the assessee only if the return declaring the loss for the earlier year was filed according to the provisions of sub-section (3) of section 139, namely, within the time allowed under sub-section (1) or within such further time allowed by the ITO in his discretion on an application made in the prescribed form by the assessee in this behalf. As in this case the return was filed long after the time limit prescribed under section 139(1) and the assessee had also not applied for extension of time for filing the return, he held that the requirements of sub-section (3) were not complied with to enable the assessee to claim a set off of the loss in respect of the assessment year 1979-80. As to the decision of the Supreme Court in this behalf in Kulu Valley Transport Co. (P.) Ltd.'s case he held that the provisions of section 139(3) had undergone a substantial change in view of the amendment of the section with effect from 1-4-1971 and, therefore, the Supreme Court's dictum, that the return filed under section 139(4) could be treated as a valid return, did not apply to this case in the absence of a specific application from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he submitted that even in the earlier section the ITO had been conferred the power of extending the time limit for filing the return and under no conceivable circumstances he would do so without a request from the assessee in this behalf. In the new sub-section as well, he submitted, the power to extend the time limit has been conferred on the ITO subject to a receipt of an application in this behalf. In other words, he submitted, both the sections are substantially same and, therefore, the amendment with effect from 1-4-1971 would not make any difference in the application of the Supreme Court ruling in this behalf. He invited our attention to Telster Advertising (P.) Ltd. v. CIT [1979] 116 ITR 610 (Bom.) and Co-operative Marketing Society Ltd. v. CIT [1983] 143 ITR 99 (MP). In the latter decision, the loss returns related to the assessment years 1972-73 and 1973-74, after the amendment of 1971, and they were filed in response to notices under section 148 of the Act. The Madhya Pradesh High Court held that the losses computed with reference to such returns, even though they were not filed within the time allowed under section 139, should be computed, carried forward and set off. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed as per the requirements of section 139(1), read with section 139(4), as held by the Supreme Court in Kulu Valley Transport Co. (P.) Ltd.'s case. He, therefore, submitted, that the decision in Kulu Valley Transport Co. (P.) Ltd.'s case had no application to the amended provisions of section 139(3) in this behalf and, consequently, the Commissioner was justified in revising the assessment under section 263. 8. We have carefully considered the rival submissions with reference to the facts obtaining in this case as also the authorities cited. We are of the opinion that this issue is similar to the issue which came up for consideration before the Hyderabad Bench of the Tribunal in Ratanlal Bhangadia's case, in which the Hon'ble Bench, after referring to similar arguments and also considering the relative merits of both the instructions cited above, came to the conclusion that the decision in Kulu Valley Transport Co. (P.) Ltd.'s case was still good law, notwithstanding the amendment to sub-section (3) with effect from 1-4-1971. No doubt, in that decision the matter was remitted back to the ITO for consideration of certain other issues, namely, whether the other requirements for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to get the benefit of section 24(2) the assessee must submit his loss return within the time specified by section 22(1). That provision must be read with section 22(3) for the purpose of determining the time within which a return has to be submitted. It can well be said that section 22(3) is merely a proviso to section 22(1). Thus, a return submitted at any time before the assessment is made is a valid return. In considering whether a return made is within time sub-section (1) of section 22 must be read along with sub-section (3) of that section. A return whether it is a return of income, profits or gains or of loss must be considered as having been made within the time prescribed if it is made within the time specified in section 22(3). In other words, if section 22(3) is complied with, section 22(1) also must be held to have been complied with. If compliance has been made with the latter provision the requirements of section 22(2A) would stand satisfied." Section 22(2A) of the 1922 Act corresponds to section 139(3) of the 1961 Act and section 22(3) corresponds to partly section 139(4) and partly section 139(5). Under section 139(4) if a person has not furnished a return w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was in force on the first day of the assessment year and, therefore, the same would be applicable to the assessment year 1980-81. No doubt, the learned Commissioner has observed that the later instruction was only clarificatory in nature and the legal position as per the amended section 139(3) would have been in vague for all the assessment years after the amendment. As regards this, we have to disagree inasmuch as we are of the opinion that the amendment in section 139(8) has not brought about any substantial change so as to nullify the decision of the Supreme Court in Kulu Valley Transport Co. (P.) Ltd.'s case. In the decision of the Madhya Pradesh High Court in Co-operative Marketing Society Ltd.'s case it has been held that even in respect of returns relating to the assessment years 1972-73 and 1973-74 filed in response to notice under section 148, the income-tax authorities were bound to compute the losses, carry them forward and allow the set off in the subsequent years even though there was no compliance in response to section 139. 11. We are, therefore, convinced that for reasons stated above as also on the basis of the decision of the Supreme Court in Kulu Valley Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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