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TMI Blog1994 (6) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer completed the assessment on 30-11-1988 u/s. 143(1) of the Act. He determined the total loss, including the brought forward losses and allowances, at Rs. 1,04,80,560. He, however, made the following observations at the end of the assessment order : " As the return of income filed on 28.12.1987 is not furnished according to the provisions of section 139(3) of the I.T. Act, the unabsorbed loss of Rs. 1,04,80,560 is not to be carried forward. Issue D.N. and copy of order. " 3. On receipt of the assessment order, the assessee made a request for rectification of the same by petition dated 24-1-1989. The petition is reproduced below : " The Dy. Commissioner of Income-tax Dated 24th January, '89 Special Range - 14, Calcutta. Dear Sir, Sub : Your order u/s 143(1) dated 30-11-1988 - Rectification of Request for. ---------------------------------------------------------------------------------------------------------------- P.A. No. 11-000-CQ-9681 ------------------------------ CAL/DC. spl. R-14 We are in receipt of a copy of your order u/s 143(1) referred to above. At the bottom of the order you have stated that 'as the return was filed on 28-12-1987, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grieved by the order dated 21-2-1990 the assessee preferred an appeal to the CIT(A). The CIT(A) was of the view that the Assessing Officer did not have the power to refuse to carry forward the losses which were already determined in the assessments for the earlier years on the ground that the return for the year had not been filed in time. He further took the view that the loss of Rs. 11,78,263 for the year under appeal consisted only of unabsorbed depreciation and unabsorbed investment allowance. He further found that the assessee had applied for extension to file the return of income up to 31-12-1987 by Form No. 6 filed on 29-7-1987 and the Assessing Officer not having rejected the application, it must be taken that the time to file the return was extended and in this view of the matter the return should be taken to be a return filed u/s. 139(3). He, therefore, directed the Assessing Officer (i) to entertain the assessee's claim regarding carry forward of unabsorbed depreciation and unabsorbed investment allowance for the year under appeal and (ii) to allow carry forward of the past losses to the subsequent years. In effect the CIT(A) directed the Assessing Officer to accept the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 11,78,263 represented only unabsorbed depreciation for the current year which is different from loss. According to the learned counsel for the assessee, whichever way the matter was looked at, the provisions of section 139(10) were not applicable. 7. On a careful consideration of the rival contentions, we are of the view that the contentions of Mr. Poddar for the assessee have to be accepted. Section 143(1) as it stood at the relevant time, did not in terms authorise the Assessing Officer or confer upon him the power in express terms to reject the carry forward of past losses and allowances which have been already determined in the assessments for the earlier years. The section gave authority to the Assessing Officer only to make limited adjustments. It expressly provided only for adjustments of an arithmetical nature and for giving effect to the carry forward of the past losses and allowances by adjusting them against the profits, if any, for the current year. Under section 157 of the Act, when it is established in the course of the assessment that a loss has taken place which the assessee is entitled to have carried forward to the subsequent years, the Assessing Officer i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, right in requesting the Assessing Officer to expunge the last few lines of the assessment order quoted in the earlier portion of our order refusing to carry forward the unabsorbed losses and allowances. 8. The above view of ours would be sufficient to dispose of the appeal. However, in deference to the elaborate arguments advanced by both the sides we would briefly notice them. Mr. Poddar submitted that there is a well-marked distinction between "loss" and unabsorbed depreciation and other allowances. This is true. A reference to the following authorities would show that under the income-tax parlance the two expressions are understood in different ways : 1. CIT v. Concord Industries Ltd. [1979] 119 ITR 458 (Mad.) 2. CIT v. Kalpaka Enterprises (P.) Ltd. [1986] 157 ITR 658 (Ker.) 3. CIT v. Shri Subhlaxmi Mills Ltd. [1983] 143 ITR 863 (Guj.) 4. CIT v. Estate and Finance Ltd. [1978] 111 ITR 119 (Bom.) 5. CIT v. Virmani Industries (P.) Ltd. [1974] 97 ITR 461 (All.) 6. Hyderabad Construction Co. Ltd. v. CIT [1981] 129 ITR 51 (AP) 7. CIT v. Kishanlal Sons (Udyog) (P.) Ltd. [1985] 154 ITR 735 (Cal.) 8. Eastern Cold Storage (P.) Ltd. v. CIT [1983] 139 ITR 664 (Cal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso (d) to section 139(10) the requirement is that the return of loss should be submitted before 31st July only where the loss is sustained during the relevant accounting year. There is no requirement under the proviso that even in respect of loss brought forward from the earlier years the return should be submitted before 31st July. Secondly, the proviso does not refer to unabsorbed allowances at all. Therefore, if at all the proviso applies to the present case it can apply only in respect of Rs. 11,78,263 and if we consider the legal position, even this figure represents only unabsorbed depreciation for the year and not a loss. That rules out the application of proviso (d) to Section 139(10) completely. 10. As already stated our decision wholly rests on the power of the Assessing Officer to refuse to carry forward the unabsorbed allowances and losses. In our view no such power is given to the Assessing Officer under section 143(1). We have already given our reasons in support of this conclusion. We may make it clear that our decision in respect of the other points raised before us were only in deference to the arguments raised before us. In our view the assessment order co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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