Commissioner of Income Tax vs Gandhinagar Bottling (P) Ltd.

D.A. Mehta, J.—The Tribunal, Ahmedabad Bench-C, has referred the following question at the instance of revenue u/s 256(1) of the Income Tax Act, 1961 (hereinafter referred to as ''the Act):

Whether, the Tribunal is right in law and on facts in directing the assessing officer to grant benefit of carry forward of loss, when the return was filed late, on a presumption on the part of the assessee that extension of time sought by it might have been granted by the department ?

The assessment year is 1985-86 and the relevant accounting period is 31-12-1984. The assessee claimed benefit of carry forward of loss in the return of Income Tax filed by the assessee but the same was not allowed to be carried forward as according to the assessing officer the return had not been filed on or before the statutory date for filing the return of income. The assessee succeeded in appeal before the first appellate authority, namely Commissioner (Appeals). The Tribunal dismissed the second appeal preferred by the revenue.

Heard Mrs. M.M. Bhatt learned standing counsel for the applicant revenue and Mrs. S.A. Soparkar for the respondent assessee. It is an admitted position between the parties that the issue raised by the question referred stands answered by the judgment of this Court in the case of Mehsana Ice and Cold Storage Pvt. Ltd. Vs. Commissioner of Income Tax, as well as the decision in the case of CIT v. Swastik Sanitary Works Ltd. (2006) 286 ITR 544.

The relevant dates have been recorded by the Tribunal in the statement of case as under:

As regards question No. 2, the facts are that the assessee filed return declaring loss on 25-11-1985, whereas the due date for filing of the return u/s 139(1) was 30-6-1985. As the return was not filed within the statutory period, the business loss determined by the assessing officer was not allowed to be carried forward. On appeal, it was contended that the assessee has made an application on 27-6-1985 seeking time for filing of the return upto 30-9-1985. Another application was made on 25-9-1985 seeking extension of time upto 31-12-1985. The assessee did not receive any intimation from the department about the fate of the application filed. The assessee, therefore, presumed that its request for extension of time: was acceded to. Reliance was placed on the decision of the Hon''ble Gujarat High Court in the case of Commissioner of Income Tax Vs. Gordhanbhai Jethabhai,

The first appellate authority on these facts directed the assessing officer to grant benefit of carry forward of loss. The Tribunal on second appeal, upheld the order of the first appellate authority.

Applying the ratio of the aforesaid decisions of this Court, it is apparent that the extension applications filed by the assessee were neither granted nor rejected and hence the assessee was entitled to presume that the applications for extension of time had been granted. The return of income has been filed within the extended period. Hence, the assessee was entitled to carry forward the computed business loss.

The Tribunal was, therefore, right in law in directing the assessing officer to grant benefit of carry forward of loss. The question referred to this Court for opinion is, therefore, answered in negative, that is, in favour of assessee and against the revenue. The reference stands disposed of accordingly with no order as to costs.