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TMI Blog2003 (3) TMI 265X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 139 of the Income-tax Act and consequently the business loss determined on the basis of such belated return is required to be carried forward for set off with the business income of the assessee in the subsequent assessment year. The learned counsel placed reliance in the judgment of the Hon'ble Calcutta High Court in the case of CIT v. Bangabasi Theatres (P.) Ltd. [1993] 71 Taxman 408 wherein it has categorically been stated by the Hon'ble High Court that in respect of section 80 read with sections 139, 72 and 80 of the Income-tax Act, 1961 for the assessment year 1984-85 decision in the case of Presidency Medical Centre (P.) Ltd v. CIT [1977] 108 ITR 838 (Cal.) will govern the assessment year 1984-85 and, therefore, even where the assessee filed his loss return for the assessment year 1984-85 beyond the period prescribed under section 139(3) the assessee was entitled to carry forward and set-off of business loss suffered by the assessee. The learned counsel further brought to our notice the decision rendered in Presidency Medical Centre (P.) Ltd. 's case wherein it was held that Circular No. 1807, dated 14-5-1985 will govern the assessment year 1984-85. It has been laid do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of late submission of income-tax returns'. Aggrieved by Assessing Officer's declining to carry forward the aforesaid losses aggregating to Rs. 179.64 crores, the assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A) observed that the law as it stood at the material point of time did not allow carry forward of losses in case of late filing of income-tax returns, unless any extension of time is sought by the assessee. Since even before the CIT(A) the assessee did not file any evidence of having sought extension of time, and since the returns filed by the assessee-company were admittedly filed beyond time limit set out in section 139(1) of the Act, CIT(A) upheld the stand of the Assessing Officer. Aggrieved by the orders of the CIT(A), the assessee is in further appeal before us. 10. Rival contentions are conscientiously heard, orders of the authorities below carefully perused, and applicable legal provisions, as indeed the judicial precedents on the issue in appeal, duly deliberated upon. 11. I find that in the case of Krishna Chandra Dutta (Cookme) (P.) Ltd. v. CIT [1993] 204 ITR 23, one of the questions before their Lordships of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in pursuance of a return filed under section 139. 14.2 The Amending Act has amended section 80 of the Act to provide that such loss shall not be allowed to be carried forward and set off unless such loss is determined in pursuance of a return filed within the time allowed under section 139(1) for furnishing a voluntary return of income or within such further time as may be allowed by the Income tax Officer. 14.3 The amendment takes effect from April 1, 1985, and will, accordingly, apply in relation to any loss for assessment year 1985-86 and subsequent years. (Section 18 of the Amending Act). We find that the position as clarified by the Board is based on the correct construction of the provisions. We also share the view that the amendment shall apply to loss arising in assessment year 1985-86 and not in the earlier years. In the premises, the second question is answered in the negative and in favour of the assessee'." 13. Once Hon'ble jurisdictional High Court puts its seal of approval on the above extracted "position as clarified by the Board" as being "based on the correct construction of the provisions" and observes that their Lordships "share the view that the amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment shall apply to loss arising in assessment year 1985-86 (onwards) ........", I am of the view that the CIT(A) was justified in declining assessee's contention that, despite the amendment in section 80 with effect from 1st April, 1985, the loss on belated returns should be allowed to be carried forward for the assessment years 1985-86 and 1986-87 as well. 16. I now turn to the judicial precedents relied upon by the assessee. 17. As far as Hon'ble jurisdictional High Court's judgment in the case of Bangabasi Theatres (P.) Ltd is concerned, it may be mentioned that, in this case, their Lordships were in seisin of the assessment year 1984-85 and, in view of the discussions in paragraphs 11, to 13 above, it is an undisputed position that the amendment in law requiring the assessee to file the income-tax returns within the time limit laid down under section 139(1), in order to avail the benefit of carry forward of losses, came into force with effect from 1985-86. The issue before their Lordships was, therefore, not relevant to the controversy in appeals before us. No doubt the Hon'ble High Court has mentioned that "the changes made in 1986 which will come into force on an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law to be determined by the Income-tax Officer and (2) whether those losses could be carried forward after being set off under section 24(2) of the Act. The first part of the question stood concluded by the decision of this court in Ranchhoddas Karsondas' case. The Income-tax Officer could have ignored the return and had to determine those losses. Section 24(2) confers the benefit of losses being set off and carried forward and there is no provision in section 22 under which losses have to be determined for the purpose of section 24(2). The question which immediately arises is, whether section 22(2A) places any limitation on that right. And to highlight its contrast with the applicable legal position under section 80 of 1961 Act whereby right to carry forward is restricted to the returns filed under sub-section (1) of section 139. This sub-section which has been reproduced before simply says that in order to get the benefit of section 24(2) the assessee must submit his loss return within the time specified by section 22(1). That provision must be read with section 22(3) for the purpose of determining the time within which return has to be submitted. It can well be said that sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9(4), up to that point of time, could be treated as returns validly filed under section 139 and, consequently, the same shall be eligible for carry forward in terms of the provisions of section 80 of the Act, as it stood at that point of time. It will, however, be fallacious inasmuch as the Hon'ble Supreme Court, in Kulu Valley Transport Co. (P.) Ltd.'s case were dealing with only the provisions of section 22(2A) of 1922 Act, which are in pari materia with the provisions of section 139(3) of the 1961 Act, and there were no restrictions, as in section 80 now, on assessee's right to carry forward of losses. It may further be noticed that even the expression "time allowed under sub-section (1) of section 139 or within such further time as may be allowed by the Income-tax Officer' was brought on the statute book with effect from 1st April, 1985, vide Taxation Laws (Amendment) Act, 1984, and it substitute the expression ,return filed under section 139". The legal provisions applicable with effect from 1st April, 1985 were, thus, neither in pari materia with the law under the 1922 Act, or the law under the 1961 Act till the point of time when this amendment in section 80 came in force. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cribed form of return of total income ..... in the same manner as he would have furnished a return under sub-section (1) had his income exceeded the maximum amount not liable to income-tax in his case, and all the provisions of this Act shall apply as if it were a return under sub section (1)." 24. The aforesaid provisions of 1922 Act are in pari materia with the provisions of section 139(3) as it stood at the relevant point of time and which, for the sake of ready reference, is reproduced below: If any person, who has not been served with a notice under sub-section (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 may furnish within the time allowed under sub-section (1) within such further time which, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion allow, a return of loss in the prescribed form and verified in the prescribed manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Hon'ble M.P. High Court that 'the decision of Hon'ble Supreme Court in the case of Kulu Valley Transport Co. (P.) Ltd was good law till the assessment year 1988-89'. In any event, since with effect from 1st April, 1985, amended section 80 of the 1961 Act restricted the right of carry forward of losses to the cases where income-tax return was filed within time allowed under section 139(1) or within such extended time, as Income-tax Officer may have allowed, and since the Hon'ble Supreme Court had allowed the carry forward of losses in case of belated returns since no statutory provision then existing "places any limitation on that right" of carry forward of losses in case of belated returns. The issue in that judgment was confined to the interpretation of section 22(2A) of the 1922 Act which is broadly in pari materia with section 139(3) of the 1961 Act. It would thus appear, in harmony with the views expressed by Hon'ble jurisdictional High Court, that, strictly speaking, Hon'ble Supreme Court's judgment in the case of Kulu Valley Transport Co. (P.) Ltd may not be applicable after the amendment in section 80, by the virtue of Taxation Laws (Amendment) Act, 1984, with effect f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e declined the carry forward of the aforesaid losses of Rs. 179.64 crores in view of the amendment in section 80 w.e.f. 1st April, 1985 and in view of the fact that income-tax returns were filed beyond the time limit allowed under section 139(1) ?" 2. Parties have been heard and records perused. The relevant facts relating to the issue involved hi these appeals may be stated even at the cost of repetition for the sake of coherence and convenience. For assessment year 1985-86, the return of income was filed by the assessee on 14-10-1985 declaring income of Rs. 5,14,82,950. The assessee had sought extension of time up to 30-9-1985. Thus the return of income filed by the assessee was beyond time allowed under section 139(1) either originally or on extension by the Assessing Officer. Similarly the return of income for assessment year 1986-87 was filed on 30-10-1987 declaring income of Rs. 3,93,67,3 1 0. The assessee had filed Form No. 6 seeking extension of time up to 31-12-1986 and subsequently up to 31-3-1987. The Assessing Officer had allowed the extension of time for filing of the return up to 31-12-1986 and the decision on extension application had been communicated to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee-company were belated and there was no evidence brought on record to show that the assessee-company sought extension of time for filing of the returns for assessment years 1985-86 and 1986-87, it was not entitled to the benefit of carry forward the business loss for any of the two years. Whereas the observation of the CIT(A) that extension of time had not been sought by the assessee is contrary to the observations of the Assessing Officer in the assessment order, yet undisputed fact remains that the returns filed by the assessee for assessment years 1985-86 and 1986-87 were beyond the time allowed under section 139(1) either originally or on extension. The assessee appealed to the Tribunal and the appeals were initially heard by a Division Bench, i.e., "C" Bench of the I.T.A.T., Kolkata. The Ld. Judicial Member decided the issue in favour of the assessee relying upon the decision of the Calcutta High Court in the case of Bangabasi Theatres (P.) Ltd., in Presidency Medical Centre (P.) Ltd.'s case and Madhya Pradesh High Court in the case of Dogar Tools (P.) Ltd Reliance has also been placed on the decisions of the Tribunal in the case of United Dairies (P.) Ltd v. ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the provisions of section 139(3) being in pari materia with sub-section (2A) of section 22 of 1922 Act, the decision of the Supreme Court in the case of Kulu Valley Transport Co. (P.) Ltd. is clearly applicable to the facts of this case. It was contended that subsection (2A) of section 22 of 1922 Act came up for judicial interpretation before the Hon'ble Supreme Court in the aforementioned case and the question before the Apex Court was whether an assessee who files belated returns of loss beyond the time, specified in the general notice under subsection (1) of section 139 of 1961 Act or within such further time as extended by the ITO for filing the return, could lawfully claim as loss suffered by him to be determined and carried forward notwithstanding the fact that the assessee has not complied with the requirement of subsection (2A) of section 22 of 1922 Act. The learned counsel further contended that sub-section (3) of section 22 of 1922 Act is also in pari materia with the provisions of sub-section (4) of section 139 read with section 80 of the Income-tax Act, 1961. According to the learned counsel, section 80 of 1961 Act only reiterates what is already set out as a conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to provisions of 1922 Act was equally applicable under the 1961 Act, more particularly because even under section 139(4) of 1961 Act a return could be filed by an assessee at any time before the assessment is made. The learned counsel further pointed out that admittedly in the case of Presidency Medical Centre (P.) Ltd., the assessment year involved is 1964-65. So, however, the amendment in section 80 of 1961 Act w.e.f. 1-4-1985 merely echoes and reiterates what was earlier contained in subsection (2A) of section 22 of 1922 Act as well as what is contained in subsection (3) of section 139 of 1961 Act. According to the learned counsel, no additional condition was sought to be imposed in the 1961 Act over and above what was already contained in section 22(2A) of the 1922 Act. It was, accordingly, contended that the law relating to assessment years 1985-86 and 1986-87 in regard to set off and carry forward of losses was no different than for assessment years 1962-63 to 1984-85 under the 1961 Act and/or any assessment year under the 1922 Act. Referring to the decision of the Hon'ble Calcutta High Court in the case of Bangabasi Theatres (P.) Ltd., it was contended that the view canvass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been placed on the decisions of the Supreme Court in the case of CIT v. Sardar Arjun Singh Ahluwalia [1999] 240 ITR 693 and Calcutta High Court in the case of CIT v. Smt. Anita Ghosh [1993] 202 ITR 991 and that of Kerala High Court in the case of CITv. Parekh Bros. [2002] 253 ITR 43. It was further contended that section 80 of Income-tax Act, 1961, as amended w.e.f. 1-4-1985, cannot be ignored. Relying upon the decision of the Supreme Court in the case of CIT v. Distributors (Baroda) (P.) Ltd. [1972] 83 ITR 377, it was contended-"No part of a provision of a statute can be just ignored by saying that the Legislature enacted it not knowing what it was saying." Relying upon the decision of the Supreme Court in the case of CWT v. Kripashankar Dayashanker Worah [1971] 81 ITR 763, it was contended that if the intention of the Legislature is clear and beyond doubt, then the fact that the provision could have been more artistically drafted cannot be a ground for treating any part of a provision as otiose. In regard to the decisions cited on behalf of the assessee, the Ld. Departmental Representative contended that in the aforementioned decisions the relevant provisions applicable for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Koppind (P.) Ltd. v. CIT[1994] 207 ITR 228 where their Lordships of the High Court have dealt with the carry forward of loss in the return filed under section 148. But on analysing the relevant provisions of the Act, their Lordships held particularly in the context of amended provisions that section 80 which, w.e.f. 1-4-1985, completely prohibits determination of loss and its carry forward and set off except where the return is filed either under section 139(2) or section 139(1) of the 1961 Act. According to the Ld. Departmental Representative, the decision of the Supreme Court in the case of Kulu Valley Transport Co. (P.) Ltd. has been considered in the aforementioned decision of Koppind (P.) Ltd. It was, accordingly, pleaded that the appeal of the assessee may be dismissed. 12. I have perused the records, given my careful consideration to the rival contentions advanced on behalf of the parties and have also taken into consideration the views expressed by the Ld. Accountant Member and the Ld. Judicial Member. 13. I first propose to consider the main contentions advanced on behalf of the parties as to whether the principle laid down by the Supreme Court in the case of Kulu V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se in which it is rendered and, while applying the decision to a later case, courts must carefully try to ascertain the true principle laid down by the decision." 15. Similarly, in the case of Director of Settlements, their Lordships of the Supreme Court held as under: "Article 141 of the Constitution unequivocally indicates that the law declared by the Supreme Court shall be binding on all courts within the territory of India. The aforesaid Article empowers the Supreme Court to declare the law. It is, therefore, an essential function of the Court to interpret a legislation. The statements of the Court on matters other than law like facts may have no binding force as the facts of two cases may not be similar. But what is binding is the ratio of the decision and not any finding of facts. It is the principle found out upon a reading of a judgment as a whole, in the light of the questions before the Court that forms the ratio and not any particular word or sentence. To determine whether a decision has 'declared law' it cannot be said to be a law when a point is disposed of on concession and what is binding is the principle underlying a decision. A judgment of the Court has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urns under section 22(3) of the Income-tax Act, 1922, hereinafter 236 Income-tax Tribunal Decisions [Vol. 85 called the 'Act', showing losses of Rs. 1,51,520 and Rs. 48,977 for the assessment years 1953-54 and 1954-55 respectively. No notice had been served on the company under section 22(2) of the Act. The Income-tax Officer held that since the returns had been filed after the statutory period the company was not entitled to carry forward the losses for both the years in the subsequent assessments. Before the Appellate Assistant Commissioner two main points were urged. The first was that the delay in the submission of the returns should have been condoned and, secondly, the returns should have been treated as having been made under section 22(3) in which case also they would be valid returns under section 22(2A) by reading sub-sections (3) and (1) of section 22 together. The Appellate Assistant Commissioner did not find any sufficient or reasonable cause for condoning the delay. On the second point he decided against the company. The Tribunal agreed with the view of the Appellate Assistant Commissioner and on the main point held that the company was not entitled to the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a return has been furnished in accordance therewith all the provisions of the Act become applicable as if it were a return under sub-section (1). That would attract section 22(3) and, therefore, a voluntary return can be filed even after the period mentioned in sub section (2A) has expired so long as the assessment has not taken place. It is pointed out that, supposing a return is filed showing income but the Income-tax Officer in the assessment proceedings holds that there has been a loss and the assessee was mistaken in showing a profit, the assessee in such circumstances can certainly claim the benefit of section 24(2). If that is possible, there is no reason or justification for holding that although he could claim the benefit of section 24(2) by filing a voluntary return in the given illustration, he would be deprived of that benefit if he filed a return voluntarily showing a loss except in compliance with section 22(2A). On the other hand, the contention on behalf of the revenue is that section 22 before its amendment in the year 1953 did not make any provision for the filing of a loss return voluntarily. Under section 22(1), returns which were invited were only of taxable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice, a return in the prescribed form and verified in the prescribed manner setting forth (along with such other particulars as may be provided for in the notice) his total income and total world income during the previous year: Provided that the Income-tax Officer may in his discretion extend the date for the delivery of the return. (2A) If any person, who has not been served with a notice under sub section (2) has sustained a loss of profits or gains in any year under the head "Profits and gains of business, profession or vocation", and such 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 the carry forward of loss in any subsequent assessment, furnish within the time specified in the general notice given under sub section (1) or within such further time as the Income-tax Officer in any case may allow, all the particulars required under the prescribed form of return of total income and total world income in the same manner as he would have furnished a return under sub-section (1) had his income exceeded the maximum amount not liable to income-tax in his case, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of the amount of profits and gains, if any, in any other business consisting of speculative transactions: Provided further that where the assessee is an unregistered firm which has not been assessed under the provisions of clause (b) of sub-section (5) of section 23, any such loss shall be set off only against the income, profits and gains of the firm and not against the income, profits and gains of any of the partners of the firm; and where the assessee is a registered firm, any loss which cannot be set off against other income, profits and gains of the firm shall be apportioned between the partners of the firm and they alone shall be entitled to have the, amount of the loss set off under this section. Explanation 1. - Where the speculative transactions carried on are of such a nature as to constitute a business, the business shall be deemed to be distinct and separate from any other business. Explanation 2 - A speculative transaction means a transaction which a contract for purchase and sale of any commodity including stocks and shares is periodically or ultimately settled otherwise than by the actual delivery or transfer of the commodity or scrips: Provided tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein contained shall entitle any assessee, being a registered firm, to have carried forward and set off any loss which has been apportioned between the partners, under the proviso to sub-section (1), or entitle any assessee, being a partner in an unregistered firm which has not been assessed under the provisions of clause (b) of sub-section (5) of section 23, to have carried forward and set off against his own income any loss sustained by the firm; (a) where an unregistered firm is assessed under clause (b) of sub section (5) of section 23, during any year, its losses shall also be carried forward and set off under this section as if it were a registered firm; (e) where a change has occurred in the constitution if a firm, nothing in this section shall be deemed to entitle the firm to have set off so much of the loss proportionate to the share of a retired or deceased partner computed in accordance with the provisions of clause (b) of sub-section (1) of section 16 as exceeds his share of profits, if any, of the previous year in the firm, or to entitle any partner to the benefit of any portion of the said loss which is not apportionable to him under the said clause (b), and whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 1-4-1985): (1) Every person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall furnish 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 - (a) in the case of every person whose total income, or the total income of any other person in respect of which he is assessable under this Act, includes any income from business or profession, before the expiry of four months from the end of the previous year or where there is more than one previous year, from the end of the previous year which expired last before the commencement of the assessment year, or before the 30th day of June of the assessment year, whichever is later; (b) in the case of every other person, before the 30th day of June of the assessment year: 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, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars 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 sub section (2), has sustained a loss in any previous year tinder 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 may furnish, within the time allowed under sub-section (1) or within such further time which, on an application made in the prescribed manner, the Income-tax Officer may, in his discretion, allow, a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub section (1). (4)(a) Any person who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be, apply as if it were a return required to be furnished under sub-section (1). (5) If any person having furnished a return under sub-section (1) or sub-section (2), discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the assessment is made." 19. Under the Income-tax Act, 1961, provisions relating to set off and carry forward of loss are contained in sections 70 to 80 (corresponding to section of the 1922 Act), However, here we are concerned with section 80 only. Section 80 of Income-tax Act, 1961 as amended by the Taxation Laws (Amendment) Act, 1984 w.e.f. 1-4-1985 reads as under: "Section 80 - Submission of return for losses 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 sub-section (2) of section 73 or sub-section (1) of section 74 or sub-section (3) of section 74A." 20. Before proceeding further, I consider it relevant. It to ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue was decided in favour of the assessee as the conditions contained in section 24(2) for carry, forward and set off of loss, if any, were satisfied or it may be said, there was no condition contained in the substantive provision of the Act for the carry forward of the loss to the following year(s) coming in conflict with the provisions of section 22 of the 1922 Act. 23. In the light of the principle of law laid down by their Lordships of the Supreme Court in the case of Kulu Valley Transport Co. (P.) Ltd., if one were to interpret section 139, as it applied up to assessment year 1984-85, it would not be difficult to comprehend that the restriction for carry forward of loss placed under section 139(3) may not be applicable in view of the provisions of section 139(4) of Income-tax Act, 1961. This is so because similar restriction had been placed under section 22(2A) of 1922 Act by insertion of an amendment under the Income-tax (Amendment) Act, 1953 w.e.f. 1-4-1952 corresponding to section 139(3) of the Income-tax Act, 1961. However, this interpretation placed on the provision of the 1922 Act is based on the vital fact that there was no such restriction for carry forward of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the non-fulfilment of condition under section 139(3) will cover the assessment year 1984-85 also. In the case of Presidency Medical Centre (P.) Ltd., the issue related to assessment year 1964-65 and their Lordships found the principle laid down by the Supreme Court in Kulu Valley Transport Co. (P.) Ltd.'s case applicable under the provisions of Income-tax Act, 1961 as well. 27. After the amendment of section 80 w.e.f. 1-4-1985 the condition imposed for the carry forward and set off of loss is that the loss which is eligible for carry forward and set off should be determined in pursuance of a return filed within the time allowed under section 139(1) or within the time extended time under the said section. Thus the condition imposed under section 80 (which is a substantive provision of the Act) w.e.f. 1-4-1985, is materially different than the condition prevailing up to 31-3-1985. Since section 80 of the 1961 Act belongs to the area of mandatory provisions of the Act, it was necessary to satisfy the conditions for being entitled to the benefit of carry forward and set off of loss to the following year(s). Their Lordships of the Supreme Court in the case of Kulu Valley Transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y pointed out, section 80 was amended by the Taxation Laws (Amendment) Act, 1984 and the CBDT issued explanatory notes on the Amended Act vide Circular No. 397 dated 16-10-1984. Relevant portion of the circular is reproduced hereunder: "14.1 Under the existing provisions of section 80 relating to submission of return for losses, no loss is allowed to be carried forward and set off under section 72(1), 73(2), 74(1) or 74A(3) unless such loss has been determined in pursuance of a return filed under section 139. 14.2 The Amending Act has amended section 80 of the Act to provide that such loss shall not be allowed to be carried forward and set off unless such loss determined in pursuance of a return filed within the time allowed under section 139(1) for furnishing a voluntary return of income or within such further time as may be allowed by the income tax Officer. 14.3 The amendment takes effect from 1st April, 1985, and will, accordingly, apply in relating to any loss for the assessment year 1985-86 and subsequent years." 29. Subsequently, section 80 was further amended by the Taxation Laws (Amendment Misc. Provisions) Act, 1986. The CBDT had issued explanatory notes in reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood return and such a return voluntarily made before the assessment cannot be ignored by the Income-tax Officer. This decision has been superseded by the Amending Act by inserting sub-section (10) after sub-section (9) of section 139. The new sub-section (10) provides that notwithstanding anything contained in any other provision of this Act, 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. As per the proviso to this sub-section, a return of income- below taxable limit shall not be treated as non est in the following circumstances : (a) a return furnished in response to a notice under section 148(2); (b) a return of a partner of a firm; (c) a return of a person who has claimed exemption of income from property held for charitable or religious purposes; (a) a return of loss which has been furnished before the 21st day of July of the assessment year relevant to the previous year during which the loss was sustained; (e) a return furnished under sub-section (4B) in respect of a political party; (f) a return furnished in support of a claim for refund under section 237. 9.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 14-3-1985 it was clarified that the said instructions would be effective for assessment year 1984-85 only. In para 3 of the said Instructions, it has been clarified by the Board as under: "3. As regards assessment years subsequent to assessment year 1984-85, section 80 of the Income-tax Act, 1961 has been amended by Taxation Laws (Amendment) Act, 1984 with effect from 9th April, 1985. Under the amended provisions carry forward and sent off loss will not be allowed unless it has been determined in pursuance of a return filed within the time allowed under section 139(1) or the time extended by the Income-tax Officer." 32. Thus, none of the circulars/instructions issued by the Board support the claim of the assessee that the amended provisions of section 80 w.e.f. 1-4-1985 are not applicable in view of the decision of the Supreme Court in the case of Kulu Valley Transport Co. (P.) Ltd. In fact, if all the circulars read carefully support the claim of the Revenue rather than the claim of the assessee. The contention advanced on behalf of the assessee that the circulars issued in contravention of law are not binding is of no consequence as I find that none of the circulars re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to extend the time, does not materially affect the situation in this case." As is evident from the above finding, the observations relate to the law as it existed up to 31-3-1985. The decision is not an authority for the law as applicable w.e.f. 1-4-1985. 34. In the case of Bangabasi Theatres (P.) Ltd., the issue related to assessment year 1984-85 and on the basis of provisions of section 80, as it applied for assessment year 1984-85, it was held that the assessee was entitled to carry forward and set off of business loss notwithstanding the fact that the return of income had not been filed within the time allowed under section 139(3) but within the time allowed under section 139(4) of 1961 Act. As in the case of Presidency Medical Centre (P.) Ltd., the issue involved in this case related to assessment year prior to 1985-86 and, therefore, the decision is of no assistance relating to the controversy involved in the years under appeal. The following observations of the Hon'ble Court can at best be understood as obiter dicta and in any case it does not advance the case of the assessee : "2. The only contention raised before us is whether in view of the Circular No. 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circular No. 469 of CBDT to hold that it was clear from the decision and the circular that the assessee is entitled for the carry forward of loss, even for assessment year 1984-85. I have pointed out elsewhere in this order that Circular No. 469 dated 23-9-1986 explained the amendment made under the Taxation Laws (Amendment Miscellaneous Provisions) Act, 1986 effective from 1-4-1987. As already pointed out the decision of the Calcutta High Court in the case of Presidency Medical Centre (P.) Ltd. related to assessment year 1964-65 and the amendment in section 80 w.e.f. 1-4-1985 was neither relevant nor considered by the Hon'ble High Court. 36. It is thus evident that the decision of the Tribunal in the case of Regent Estates Ltd. is per incuriam. In the case of Gurnam Kaur, their Lordships of the Supreme Court held that a decision should be treated per incuriam when it is given in ignorance of the terms of a statute or of a rule having the force of a Statute. I may also mention that a decision per incuriam means through inadvertence. A decision when given in ignorance of the terms of the Statute or of a rule having the force of law is a decision per incuriam In this case, relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Tribunal of subordinate jurisdiction. This decision is in favour of the assessee and, therefore, I feel myself duty bound to consider the same with utmost respect, 39. At this stage it would be relevant to point out that the Kerala High Court in the case of Smt. Gunavathy Dharamsy held that w.e.f. 1-4-1985 no loss would be allowed to be carried forward or set off unless the return under section 139(1) had been filed within the time allowed under sub-section (1) of section 139 or filing the return or within such further time allowed by the ITO. Their Lordships of the Kerala High Court have considered the provisions of the 1922 Act vis-à-vis the corresponding provisions under the 1961 Act. The legislative history and the amendments effected to section 80 have also been taken into account in arriving at the conclusion. Their Lordships have pointed out that the reliance on the decision of the Apex Court in CIT v. Manmohan Das [1966] 59 ITR 699 by the Tribunal was misplaced as that was a decision rendered under the Income-tax Act, 1922 whereafter the position has substantially been changed. Their Lordships have also pointed out that the Tribunal did not notice the provisions of sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the courts have to carry out that intention." 42. Their Lordships of the Supreme Court in the case of CIT v. Cellulose Products of India Ltd. [1991] 192 ITR 155 explained the circumstances under which the rule of interpretation with a provision granting relief should be construed liberally so as to effectuate the object thereof may be taken recourse to. Their Lordships held -"It is only when there is any genuine doubt about the interpretation of a fiscal statute or where two opinions are capable of being formed that the rule of interpretation that a provision granting relief should be construed liberally so as to effectuate the object thereof may be taken recourse to." 43. Dealing with the contentions advanced on the basis of the decisions of the Supreme Court in the cases of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 and CIT v. Naga Hills Tea Co. Ltd [1973] 89 ITR 236 that the view favourable to the assessee should be adopted, their Lordships of the Bombay High Court in the case of CIT v. Thana Electricity Supply Ltd. [1994] 206 ITR 727 at page 744 held as under: "We have considered the submission. We have also carefully considered the decisions of the Supreme Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their Lordships of the Calcutta High Court referred to the CBDT Circular No. 397 dated 16-10-1984 and held as under: "Our attention has also been drawn to paragraphs 14.1, 14.2 and 14.3 of Circular No. 397 dated October 16, 1984. The extract of the relevant portion of the said Circular is set out below : Submission of return of loss - Section 80: 14.1 Under the existing provisions of section 80 relating to submission of return for losses, no loss is allowed to be carried forward and set off under section 72(1), 73(2), 74(1) or 74A(3) unless such loss has been determined in pursuance of a return filed under section 139. 14.2 The Amending Act has amended section 80 of the Act to provide that such loss shall not be allowed to be carried forward and set off unless such loss is determined in pursuance of a return filed within the time allowed under section 139(1) for furnishing a voluntary return of income or within such further time as may be allowed by the Income tax Officer. 14.3 The amendment takes effect from April 1, 1985, and will accordingly, apply in relation to any loss for assessment year 1985-86 and subsequent years. (Section 18 of the Amending Act). We find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss placed under section 80 of the 1961 Act is admittedly not satisfied in this case. 46. The case records may be placed before the Division Bench for passing consequential order in accordance with majority view, ORDER Per B.K. Mitra, JM - On a difference of opinions between the Members constituting this Division Bench, the following question was refer-red to a Third Member for his opinion under section 255(4) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstances of the case, the Tribunal should have allowed carry forward of the loss aggregating to Rs. 179.64 crores, for assessment years 1985-86 and 1986-87 or the Tribunal should have declined the carry forward of the aforesaid losses of Rs. 179.64 crores in view of the amendment in section 80 w.e.f. 1st April, 1985 and in view of the fact that income-tax returns were filed beyond the time limit allowed under section 139(1) 2. Hon'ble Vice President (KZ) has, as Third Member in this case and taking the totality of the facts and circumstances of the case into consideration in the light of the legal principles discussed in his order, concurred with the conclusion of the Accountant Member that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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