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TMI Blog1993 (3) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the return for the assessment year 1983-84 having been filed on July 2, 1985, the amended provision of section 80 effective from April 1, 1985, was applicable and hence the loss determined was not to be carried forward ?" The statement of facts as made out by the Tribunal shows that the assessee-company filed its return voluntarily for the assessment year 1983-84 on July 2, 1985. It claimed a loss of Rs. 11,21,210. According to the assessee-company, no notice was issued either under section 139(2) or section 148 of the Income-tax Act, 1961, calling for a return. The assessment was completed under section 143(3) of the Act, the loss being computed at Rs. 3,69,623 in place of Rs. 11,21,210 as claimed by the assessee in the return. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, concluding that any loss arising out of encashment of investments should be treated as capital loss and in regard to the claim for carry forward of loss as determined by the Income-tax Officer, the Tribunal concluded that, since the return was filed by the applicant-company after April 1, 1985, though it relates to the assessment year 1983-84, the amended provision of section 80 as effective from April 1, 1985, hits the assessee's case. It disentitled the assessee from the benefit of the carry forward because the return of loss had been filed though voluntarily, yet belatedly, on July 2,1985. The first question arises from the assessee's claim that the loss incurred by it in encashment of the cash certificates with the United Bank of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontrived. After all, what is lost to the assessee is part of its capital asset being the fixed deposit. It is not the case of the assessee that its fixed deposit is not its capital asset, what is pleaded is that the loss has an indirect impact on its profit earning. A capital loss may affect or benefit the course of trading by chain effect, but that will not determine the character of a loss as between capital and revenue. The question is what kind of asset the loss directly relates to or results from. If it is loss of capital, it has to be on capital account. The final impact of the loss is not the determinative criterion. Conversely, revenue loss may have a remote effect on capital by way of its erosion. On that score, a revenue loss shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not governed by the amended section 80. It is the unamended section 80 that should govern the assessee's case for the instant assessment year being a year earlier than the assessment year 1985-86. It cannot be disputed that the decision of this court in Presidency Medical Centre (P.) Ltd. v. CIT [1977] 108 ITR 838, shall squarely apply to this case and, accordingly, the loss determined on the basis of a return under section 139 is entitled to the benefit of the carry forward and set off. The amendment has not affected the position of law as declared by the said decision in respect of loss arising from assessment year earlier than the assessment year 1985-86. Our attention was brought to an instruction of the Board (Instruction No. 1607 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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