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TMI Blog2007 (9) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... f, necessary for answering the question are as under 3. The assessee is a partnership firm. Original assessment was completed under section 143(1) of the Income-tax Act, 1961. Subsequently, the Assessing Officer passed rectification order under section 154 of the Act, withdrawing the allowance of carry forward of depreciation and investment allowance, in respect of the assessment year 1985-86 on the ground that there was delay in filing the return of income. The Assessing Officer took the view that under section 80 of the Income-tax Act, carry forward of losses could not be allowed if the return is filed late. According to the Assessing Officer, return of income for the assessment year 1985-86 was filed on October 30, 1985, as against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance with the provisions of sub section (3) of section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A." 7. From a bare reading of the aforesaid provisions, it is manifestly clear that only such losses which have been determined in pursuance of a return filed in accordance with the provisions of section 139 shall be carried forward and set off which have been provided under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A. The Taxation Laws (Amendment) Act, 1984 (Act 67 of 1984), amended section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subsequent years." 8. The question that falls for consideration is as to whether the losses referred to in section 80 of the Act also includes unabsorbed depreciation and investment allowance. Section 72 lays down the provisions with regard to carry forward and set off of business losses. According to this section, where for any assessment year, the net result of the computation under the head "Profits and gains of business or profession" is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, then so much of the loss shall be carried forward to the next assessment year. Similarl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax (Appeals) and the Appellate Tribunal have rightly arrived at a conclusion that unabsorbed depreciation and investment allowance stand on a different footing vis-a-vis unabsorbed business losses for the purpose of section 80 of the Act which specifically refers the carry forward and set off of business losses under the provisions of sections 72, 73 and 74 of the Act. 12. In the result, we answer the reference in favour of the assessee and against the Revenue holding that the Tribunal was justified in directing the Assessing Officer to allow adjustment of unabsorbed depreciation and investment allowance of the earlier years in spite of the fact that the return was filed late. 13. D. G. R. PATNAIK J.—I agree. & ..... X X X X Extracts X X X X X X X X Extracts X X X X
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