Commissioner of Income Tax vs Bangabasi Theatres (P.) Ltd.

Ajit K. Sengupta, J.—In this reference u/s 256(1) of the income tax Act, 1961 (''the Act'') for the assessment year 1984-85 the following question of law has been referred to this Court:

Whether, having regard to the facts that the assessee filed its loss return beyond the period prescribed u/s 139(3) of the income tax Act, 1961 and on a proper interpretation of section 80 of the said Act, the Tribunal is right in law in directing the income tax Officer to allow carry forward and set off of the business loss suffered by the assessee ?

Shortly stated, the facts are that the assessee incurred business loss which was duly computed by the ITO. But he did not allow carry forward of the loss because the return was not filed u/s 139(1) of the Act. The Commissioner (Appeals) declined to interfere but the Tribunal following the decision of this Court in Presidency Medical Centre (P.) Ltd. Vs. Commissioner of Income Tax, set aside the order of the ITO and directed him to allow carry forward and set off of the loss.

The only contention raised before us is whether in view of the Circular No. 1807, dated 14-5-1985 the decision rendered in Presidency Medical Centre (P.) Ltd. ''s case (supra) will govern the assessment year 1984-85. It has been laid down in the said circular that the department accepted the decision in the Presidency Medical Centre (P.) Ltd. ''s case (supra) prior to assessment year 1984-85. We are concerned here with the assessment year 1984-85. In our view the amendment was made in section 139(1) only from 1-4-1987 which will govern the assessment year 1987-88 and subsequent years. We do not find that the assessment years 1984-85 to 1986-87 will be separately treated because of the said Circular of the Board. We may mention that an amendment was made in section 139 in 1970. The principle in Presidency Medical Centre (P.) Ltd.''s case (supra) was applied by this Court even after the said amendment had been made in 1970. This Court in Commissioner of Income Tax Vs. Nagpur Steel and Alloys (P.) Ltd., considered a similar case. In that case one of the questions was as follows:

Whether, on the facts and in the circumstances of the case, and having regard to the provisions of section 139(3) of the income tax Act, 1961, limiting the time within which loss should be declared, the Tribunal was justified in holding that the assessee was entitled to carry forward the loss even though the loss return was not filed within the time prescribed u/s 139(3) as amended by the Taxation Laws (Amendment) Act. 1970?

This Court following the decision in Presidency Medical Centre (P.) Ltd. ''s case (supra) answered the said question in the affirmative and in favour of the assessee. In our view, the said decision will cover the assessment year 1984-85. The changes made in 1986 which will come into force on and from the assessment year 1987-88 will not take out the assessment year 1984-85 from the ambit of the decision in Presidency Medical Centre (P.) Ltd. ''s case (supra). In that view of the matter, we answer the question in this reference in the affirmative and in favour of the assessee.

There will be no order as to costs.

Banerjee, J.

I agree.