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Anantlal Singhee Vs. Income-tax Officer - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Nagpur
Decided On
Judge
Reported in(1985)11ITD263(Nag.)
AppellantAnantlal Singhee
Respondentincome-tax Officer
Excerpt:
.....off of losses relating to this year. he, accordingly, declined to direct the ito to determine the loss relating to these years and set off the same in the assessment for the year under consideration.4. aggrieved with the above decision, the assessee is in appeal before us. shri dewani appearing for the assessee, while conceding that the returns for these years were not filed by the assessee, however, submitted, that the ito was under an obligation to determine the losses relating to these years, as the assessee had made such a claim during the course of the assessment proceedings for this year. according to him, section 80 of the act interpreted in the light of the decision of the madras high court in dalmia cement (bharat) ltd.'s case (supra), is capable of entitling the assessee to.....
Judgment:
1. In this appeal by the asses-see, an interesting question has been posed for our decision, namely, whether the ITO was required to set off the losses relating to earlier years even though the same had not been determined in pursuance of returns filed under Section 139 of the Income-tax Act, 1961 ('the Act'), relating to those years.

2. The assessee derives share income from the firm, Vijay Khandsari Sugar Mills, Nagpur, of which he is a partner. In the course of the assessment proceedings for the assessment year 1980-81, the assessee claimed set off in respect of share of loss from the firm, Indian Fabric Corporation, for the assessment years 1976-77, 1977-78 and 1979-80. The ITO, however, allowed the share of loss from this firm for the assessment year 1976-77 to be set off as the same had been determined in pursuance of a return filed for that year and allowed to be carried forward for set off in future. He, however, denied the benefit of set off in respect of the share of loss from this firm for the assessment years 1977-78 and 1979-80, as the assessee had not filed any returns of income for these years and no loss had been determined in pursuance of the same.

3. Aggrieved with the same, the assessee filed an appeal before the AAC, who in his order, dated 22-1-1983, confirmed the action of the ITO, Shri Dewani, appearing for the assessee before the AAC, contended that the claim of the assessee for set off of the loss for this year could not be denied merely on the ground, that the loss had not been determined and in support of the same, cited the decision of the Madras High Court in CIT v. Dalmia Cement (Bharat) Ltd. [1976] 104 ITR 337.

After considering this decision, the AAC concluded that the facts in the decided case referred to, could be distinguished from the facis of the present case and, therefore, the ratio of that decision would not be applicable to the case on hand. He noticed, that the decision of the Madras High Court in Dalmia Cement (Bharat) Ltd.'s case (supra), the assessee had filed returns for the assessment years 1952-53 to 1954-55, showing loss belatedly and the ITO, therefore, refused to take notice of the same on the ground, that the returns had not been filed within the time allowed under Section 22(2A) read with Section 22(1) of the Indian Income-tax Act, 1922. He, accordingly, ignored those returns and did not compute the loss for those years. The Tribunal, however, directed the ITO to determine the loss for these years as the assessee had applied for extension of time and the returns were filed within the extended time limit. He also noticed that the Tribunal did not give any such direction to the ITO in respect of the assessment years 1950-51 and 1951-52, for which the assessee had not filed the returns within the statutory period and the assessments for those years had become time barred when the returns were filed. On these facts, the AAC noticed, that the High Court had concluded that the returns relating to 1952-53 to 1954-55, having been filed within the extended time limit and also having regard to the decision in CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518 (SC), that though a return disclosing a loss is not filed in time as per the general notice under Section 22(1) or Section 22(2A) of the 1922 Act, the provisions of Section 24(1) and (2) of the 1922 Act should be taken into account for the purpose of granting relief to the assessee, and that the Tribunal was justified in directing the ITO to determine the losses relating to the assessment years 1952-53 to 1954-55 for the purpose of granting relief to the assessee. Since, in the present case, the assessee had not filed the returns for these years even within the extended time limit under Section 139(4) of the Act, the assessee was not entitled to claim set off of losses relating to this year. He, accordingly, declined to direct the ITO to determine the loss relating to these years and set off the same in the assessment for the year under consideration.

4. Aggrieved with the above decision, the assessee is in appeal before us. Shri Dewani appearing for the assessee, while conceding that the returns for these years were not filed by the assessee, however, submitted, that the ITO was under an obligation to determine the losses relating to these years, as the assessee had made such a claim during the course of the assessment proceedings for this year. According to him, Section 80 of the Act interpreted in the light of the decision of the Madras High Court in Dalmia Cement (Bharat) Ltd.'s case (supra), is capable of entitling the assessee to claim set off of loss relating to earlier years, even though no such loss had been determined in pursuance of returns filed for those years under Section 139. Shri Charles, the learned senior departmental representative, supported the order of the AAC with reference to the return form and submitted that no statutory obligation was cast on the ITO, while completing an assessment to determine the loss relating to earlier years and set off of the same. He further submitted that the Act enables the assessee only to claim set off in respect of losses relating to earlier years computed in pursuance of returns filed within the statutory time limits for those years.

5. After careful consideration of the rival submissions, the relevant provisions of the statute and the authorities cited, we are unable to agree with the proposition made on behalf of the appellant, that the ITO was bound to compute the loss relating to earlier years and set off the same, even though no returns had been filed in respect of those years under Section 139. In this connection, a reference to the following provisions of the Income-tax Act is necessary to understand the implications of the argument of the assessee. Under Section 139(3), the assessee may furnish, within the time allowed under Section 139(1) or within such further time as the case may be, a return of loss in the prescribed form, if he is desirous of having the loss sustained by him, carried forward and set off under Sections 72, 73 and 74 of the Act.

Section 80 lays down that no loss which has not been determined in pursuance of return filed under Section 139, shall be carried forward and set off under Sections 72, 73 or 74. A reading of these two sections carefully would indicate that for an assessee to claim set off of loss, he should file a return within the time allowed under Sub-section (1) of Section 139. Under Section 80, no loss which has not been determined in pursuance of a return filed under Section 139, shall be carried forward and set off. The time limit for the submission of a loss return under Section 139(3) was the subject-matter of interpretation by the Supreme Court in the case of Kulu Valley Transport Co. (P.) Ltd. (supra). In that case, their Lordships held that though a return disclosing a loss was not filed in time as required under Section 139(3) read with Section 139(1), the assessee would not lose the right of set off of loss, if he has filed the return after the period prescribed under Sub-section (1) of Section 139, but within the time allowed under Sub-section (4) of Section 139.

Therefore, what we have to see in this case is whether the assessee had filed any returns relating to these years at least within the time allowed under Section 139(4). While enquiring into this aspect, we, however, find that the assessee had not filed any returns relating to these years even within the extended time available to the assessee under Section 139(4). When no return has been filed, Section 80 provides a statutory bar against any loss, which has not been determined in pursuance of a return filed under Section 139, being considered and set off in a subsequent assessment. For the sake of convenience, we would reproduce hereunder the provisions of Section 80: Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of return filed under Section 139, shall be carried forward and set off under Sub-section (1) of Section 72 or subsection (2) of Section 73 or Sub-section (1) of Section 74 or Sub-section (3) of Section 74A.Since no returns relatirig to the assessment years in respect of which set off of loss has been claimed have been filed, there is no statutory obligation on the ITO to compute the loss in the assessment of the year under consideration and set off the same. The facts in Dalmia Cement (Bharat) Ltd.'s case (supra), relied upon on behalf of the assessee, are entirely different. In that case, the assessee applied for extension of time for submission of returns and also obtained the extension for filing the returns from the ITO. Returns were filed within the extended time but, however, the ITO, after enquiry, closed the proceedings, observing that he would not take notice of the returns which were filed beyond the time limit prescribed under Section 22(1) and 22(2A) of the 1922 Act, corresponding to Section 139(1) and 139(3) of the 1961 Act. On appeal, the Tribunal directed the ITO to compute the losses relating to these years and set off the same in the subsequent years' assessments. On further appeal, the High Court, following the Supreme Court's decision in Kulu Valley Transport Co.

(P.) Ltd.'s case (supra), upheld the action of the Tribunal in directing the ITO to determine the loss relating to those years and to grant set off of the same. From the above facts, it would be clearly noticed, that, in the decided case, returns were filed within the extended time limit under Section 139(4) and, therefore, the ITO had a statutory obligation to compute the loss relating to those years, as per the interpretation of the Supreme Court in Kulu Valley Transport Co. (P.) Ltd.'s case (supra). In the present case, no such returns had been filed by the assessee for the years in question. Therefore, Section 80, referred to earlier, would automatically apply to the facts of this case, namely, that no loss which has not been determined in pursuance of a return filed under Section 139 shall be carried forward and set off. We, are, therefore, unable to agree with Shri Dewani, the learned Counsel for the assessee, that, Section 80 read in the light of the decision of the Madras High Court in Dalmia Cement (Bharat) Ltd.'s case (supra), supports his view in this regard. As we have observed earlier, the facts in the two cases are totally different. We, therefore, dismiss the appeal filed by the assessee and confirm the order of the AAC.


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