9911796707
TMI Blog1991 (8) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ,996, which is the subject-matter of controversy. It appears that the petitioner had unabsorbed loss of Rs. 4,45,85,284, of the earlier years which has to be carried forward and set off against the profits of the subsequent year. On August 20, 1986, the Taxation Laws (Amendment and Miscellaneous Provisions ) Bill, 1986, with regard to the amendment, inter alia, of certain provisions of the Income-tax Act, 1961 ( for short, " the Act "), was introduced in Parliament. It became law having received the assent of the President on September 10, 1986, and the Act is called the "Taxation Laws (Amendment and Miscellaneous Provisions) Act, 1986 ( for short, " the Amendment Act Section 12 of the Amendment Act amended sub-section (3) of section 139 of the Act with effect from April 1, 1987, and inserted sub-section (10) with effect from April 1, 1986. Having regard to the provisions of the newly introduced sub-section (10) of section 139, the respondent through his letter dated September 29, 1987, informed the petitioner that the return filed by it on September 30, 1986, was treated as non est. In this writ petition, the petitioner challenges the validity of this letter by seeking a writ of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1986. It is also stated that the petitioner was advised to submit the return on the forms supplied by the Department as the forms supplied by other agencies had no assurance of being authentic and, therefore, the petitioner was justified in looking to the Department for supply of forms, but the forms were not supplied in time. The respondent, it is stated, did not specify as to whether the forms were made available. Sri Y. Ratnakar, learned counsel for the petitioner, submits that subsection (3) of section 139 was amended with effect from April 1, 1987, whereas sub-section (10) was inserted, retrospectively, with effect from April 1, 1986, and, therefore, the new provision has to be so construed as not to take away the vested right of the petitioner under the unamended provisions of sub-section (3) of section 139 of the Act. To appreciate the contention of learned counsel, it would be useful to read sub-section (3) of section 139 of the Act as it stood before the amendment and in its amended form, as well as sub-section (10) of section 139. Sub-section (3) of section 139 before amendment: "If any person who has not been served with a notice under subsection (2), has susta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the loss was sustained ; (e) a return furnished under sub-section (4B) in respect of political party ; and (f) a return furnished in support of a claim for refund under section 237. " A perusal of sub-section (10) of section 139 which is inserted by the Amendment Act and is given retrospective effect from April 1, 1986, would show that 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. It may be noticed that this sub-section begins with a non obstante clause and it has an overriding effect on the other provisions of the Act which, of course, include sub-section (3) of section 139. The proviso prescribes six situations which may be termed as exceptions to which the provisions of sub-section (10) do not apply. A return of loss which has been furnished before July 31, of the assessment year relevant to the previous year during which the loss was sustained, is one of the exceptions to sub-section (10). (Clause (d) to the proviso). Before adverting to the meaning of clause (d) of the proviso to subsection (10), it would be appropriate to notice the provisions of sub-section (3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be taken away by giving retrospective effect to sub-section (10) of section 139 with effect from April 1, 1986. It has been noticed above that sub-section (3) of section 139 contemplates that, if any person has sustained any 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 and set off against the income, he has to file the return within the time allowed under sub-section (1) which would be June 30, 1986, or within such further time as allowed by the Income-tax Officer. It is only then that the provisions of the Income-tax Act would apply as if the return was filed under sub-section (1) of section 139. Admittedly, in this case, the request of the petitioner for extension of time was rejected by the Income-tax Officer and there was no valid return under sub-section (3) of section 139 to be treated as a return filed under sub-section (1) of section 139. Indeed, in this case the return was filed by the petitioner on September 30, 1986, i.e., after the Amendment Act came into force on September 10, 1986, and sub-section (10) was inserted wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the end of the assessment year 1988-89, provided the assessment for that year had not been made. As admittedly the assessment had not been made before September 30, 1986, on which date the return was filed, the return filed by him would be within the time allowed under sub-section (4) of section 139. Reliance is placed on a judgment of the Supreme Court in CIT v. Kulu Valley Transport Co. P. Ltd. [1970] 77 ITR 518, in support of the contention that the petitioner is entitled to have the loss determined on the return filed on September 30, 1986, which is within the time prescribed under sub-section (4) of section 139. That case arose under the Indian Income-tax Act, 1922 (for short, "the old Act"). The assessee in that case filed voluntary returns disclosing losses for the assessment years 1953-54 and 1954-55. The question was whether the assessee had the right to get the loss determined and carried forward under section 24(2) of the old Act in spite of the fact that the returns were not filed within the time specified in section 22(1) and the time had not been extended by the Income-tax Officer. In that case also, no notice was served on the assessee under subsection (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (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." It would be relevant to read here section 80 of the Act which deals with " submission of return for losses": "Section 80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed within the time allowed under sub-section (1) of section 139 or within such further time as may be allowed by the Income-tax Officer, shall be carried forward and set off under sub-section (1) of section 72 or subsection (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or subsection (3) of section 74A. " This section provides that a loss which has not been determined in pursuance of a return filed within the time allowed under sub-section (1) of section 139 or within such further ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties declaring that the levy of sales tax and excise duty, education cess and health cess was bad. By section 2 of the impugned Act, the rate of tax was enhanced from 6 1/2 per cent. to 45 per cent. with retrospective effect to avoid the liability of refunding the excess amount of sales tax which became payable pursuant to the said judgment. By section 3, the judgment and order of the High Court in the earlier writ petition was sought to be nullified. The Mysore High Court held that the impugned provisions were valid. On appeal, the Supreme Court held that, as a result of the judgment of the High Court declaring the levy illegal, the State became obliged to refund the excess amount wrongfully and illegally collected by virtue of the specific direction to that effect in the earlier judgment, that the object of enacting the amended provision is to nullify the effect of the judgment, which became conclusive and binding on the parties to enable the State Government to retain the amount wrongfully and illegally collected as sales tax and this object has been sought to be achieved by the impugned amendment which does not even purport or seek to remedy or remove the defect and lac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction." Section 12 of the Amendment Act which amended section 139 in so far as it is relevant for our purpose reads as follows : " 12. Amendment of section 139. - In section 139 of the Income-tax Act . . . . . . (b) after sub-section (9), the following sub-section shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 1986, namely:-" From a plain reading of the above section, it is abundantly clear that the newly inserted section was brought into force with effect from April 1, 1986. There is no ambiguity in the said section and the intention of the Legislature is very clear. Further, it has already been held above that the said provision does not take away any right much less fundamental right of the petitioner. The mere fact that a provision of a statute having retrospective operation results in hardship to a citizen is no ground to declare that it should not be given retrospective effect which would run counter to the intention of Parliament. For the above reasons, we cannot accept the contention of learned counsel. It is lastly contended that the rejection of the application for extension of time by the Income-tax Officer ..... 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