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TMI Blog2001 (3) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... reated as a return filed under section 139(3) of the Income-tax Act for the purpose of allowing carry forward and set off of loss to subsequent assessment years?" The brief facts of the case are as under: The assessee is a private limited company. The dispute relates to the assessment year 1983-84 for which the relevant previous year ended on November 30, 1982. The assessee filed its return of income on September 27, 1985, in response to a notice under section 148, declaring a loss of Rs. 5,28,024. The Income-tax Officer held that the assessee during the year had not carried on any manufacturing activity and there was no business activity during the year and so the loss claimed by the assessee cannot be allowed. He was also further of the view that the return having been filed in response to a notice under section 148, the assessee will not be entitled to the benefit of carry forward of the loss. He accordingly closed the assessment as N.A. On appeal, the Commissioner of Income-tax (Appeals) held that the provisions of section 148 are intended only for the benefit of the Revenue and not for the assessee and in the above circumstance, he held that the Income-tax Officer was just ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the time specified therein and before the completion of the assessment, the same would not entitle the assessee to have the benefit of the loss carry forward. Learned counsel strongly contended that the legislative intention is very clear that though an extended period of time was provided under section 139(4) for filing of a return beyond the time specified under section 139(1), however, the Legislature has consciously restricted the time limit in so far as the loss returns are concerned to have the loss to be carried forward. Therefore, it was contended that in section 139(3) it was specifically restricted that only those assessees who have filed their returns within the time provided under section 139(1) of the Act, are entitled to the said benefit. Learned counsel also contended that the return filed by the assessee in the present case is only a return filed in response to a notice issued under section 148 of the Act ; That the provisions under section 148 of the Act, are intended only for the benefit of the Revenue and not for the benefit of the assessee. Therefore, the return filed in response to a notice under section 148 of the Act would not be counted for the benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the total income of any other person during the previous year, the Income-tax Officer may, before the end of the relevant assessment year, issue a notice to him and serve the same upon him requiring him to furnish, within thirty days from the date of service of the notice, a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed: Provided that, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, extend the date for furnishing the return, and, notwithstanding that the date is so extended, interest shall be chargeable in accordance with the provisions of sub-section (8). (3) If any person who has not been served with a notice under subsection (2), has sustained a loss in any previous year under the head 'Profits and gains of business or profession' or under the head 'Capital gains' and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) of section 74 or sub-section (3) of section 74A, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him to furnish a return within 30 days from the date of service of the notice or within such further time as he may extend. Sub-section (3) of section 139 provides that if any person who has not been served with a notice under sub-section (2), has sustained a loss in any previous year and claimed that the loss or any part thereof should be carried forward, under the provisions specified thereunder, he may furnish within the time allowed under sub-section (1) or within such further time as the Income-tax Officer may in his discretion allow a return of loss. Sub-section (4) of section 139 further provides that any person who has not filed a return either under sub-section (1) or sub-section (2), may before the assessment is made, furnish a return for any previous year at any time before the end of the period specified in clause (b) of that sub-section (two years from the end of the relevant assessment year). Further, section 80 of the Act also contemplates that in order to have the benefit of carry forward of the loss, the loss has to be determined in pursuance of a return filed under section 139. In the present case, it is not in dispute that the assessee-company did not file its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a notice on any person, whose total income in the opinion of the Income-tax Officer rendered him liable to be assessed to income-tax, requiring him to furnish a return. Sub_ section (2A) of section 22, which was added with effect from April 1, 1952, provides, if any person who was not served with a notice under sub-section (2), has sustained a loss in any previous year and such a loss or any part thereof (would ordinarily have been carried forward under sub-section (2) of section 24), he shall, if he is to be entitled to the benefit of carry forward of the loss in any subsequent year, furnish within the time specified under sub-section (1) or within such further time as the Income-tax Officer may allow a return of total income. Sub-section (3) of section 22 makes the assessee to file a return voluntarily, if he has not filed any return under sub-section (1) or (2) of that section, at any time before the assessment was made. While considering the abovesaid provisions, the apex court held that even though the assessee therein did not file a return within the time provided under sub-section (1) of section 22, as the asses see has still filed a return within the time provided under sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Revenue was that there is no reference in sub-section (3) of section 139, as to the return either filed or to be filed under sub-section (4). Therefore, a return filed under sub-section (4) would not get the benefit of determination of the loss to be carried forward to the subsequent assessment years. This contention, in our opinion has no merit to stand in the light of the decision of the apex court, referred to earlier. If the principle as laid down by the apex court is applied, sub-section (4) has to be read as a proviso to sub-section (1), in which case a return filed under sub-section (4) has to be treated as a return under sub-section (1) and in which case the loss determined is to be allowed to be carried forward in terms of sub-section (3) of section 139. Apart from the above, even section 80 which provides for the submission of returns of loss, contemplates determination of the loss in pursuance of a return filed under section 139 and not under sub-section (1) or (2) of section 139. Therefore, it can be safely inferred that the return contemplated under section 80 includes a return filed under sub-section (4) and if so interpreted the assessee-company is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the protection of the public exchequer from loss of Revenue. It is a section meant to be beneficial exclusively to the Revenue. Therefore, it was held that the assessment in pursuance of a return filed under section 148 read with section 147 has a distinct and separate character and purpose. Holding so, it was held that the assessee is not entitled to the benefit of carry forward of the loss declared in the return filed in pursuance of a notice under section 148. The facts of that case are totally different vis-a-vis the facts of the present case. In the present case, the period prescribed under section 139(4) did not expire though the return was filed in pursuance of a notice under section 148. As we have already held earlier, by issuing a notice under section 148, the statutory rights conferred on the assessee cannot be taken away and if so the assessee is entitled to file a return at any time before the expiry of the period prescribed under the statute. Therefore, this decision is not of any assistance to the Revenue. For the above foregoing reasons, we agree with the view taken by the Tribunal that the assessee is entitled to the benefit of the loss to be determined and carr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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