Commissioner of Income Tax vs Sankarlal Goenka

Sharma, J.—On a prayer of the Revenue, the following questions have been referred to this court by the learned Tribunal under Sub-section (1) of Section 256 of the Income Tax Act, 1961, by order dated September 5, 1987, passed in Case No. R. A. 174/(Gau) of 1986. The reference arises out of the order of the learned Tribunal passed in Appeal No. I. T. A. 162/ (Gau) of 1985 for the assessment year 1978-79. The question is as follows :

"(i) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that as the return is filed within the same time allowed u/s 139(4) of the Income Tax Act, 1961, carry forward of loss has to be allowed as a matter of course u/s 72(1) read with Section 80 of the said Act, even though the return was not filed within the time specified in Section 139(1) as mentioned in Section 139(3) of the Act ?"

Heard Mr. Talukdar, learned counsel for the Revenue and Dr. Saraf, learned counsel for the assessee. It may be stated that there is a typographic mistake in the last line of the reference, inasmuch as, instead of "Section 139(3)" the section should he "Section 139(4)".

The society was assessed as an individual and during the year relevant to the assessment year 1977-78, the return of income was filed declaring a net loss of Rs. 78,050. In the assessment year, the Income Tax return was for Rs. 7,380 and the loss of the earlier year was sought to be carried forward, but the Income Tax Officer refused to allow the carry forward loss on the ground that the return of income for the earlier year was filed after 27 months from the due date for the filing of the return of income.

It has been urged by learned counsel for the assessee that a similar question was referred to this court which was answered in favour of the assessee in the case of CIT v. K.C. Bezbarua [1992] 195 ITR 521 . On a perusal of the said judgment, we find that the Division Bench of this court, while considering the reference, referred to the decision of the apex court in Commissioner of Income Tax, Punjab Vs. Kulu Valley Transport Co. P. Ltd., and held that though the above case was in connection with the Indian Income Tax Act, 1922, the ratio is also valid for the 1961 Act. It was also noted by the Division Bench that a similar view was expressed both by the Calcutta High Court and the Bombay High Court in Presidency Medical Centre (P.) Ltd. Vs. Commissioner of Income Tax, and Telster Advertising Pvt. Ltd. Vs. Commissioner of Income Tax, Bombay City I., respectively. The question referred to in that case was whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the loss determined in accordance with the provisions of the Act has to be carried forward and this question was answered in favour of the assessee holding that Subsections (1) and (4) of Section 139 are to be read together and, on being so read, the assessee is entitled to carry forward the loss if he has filed the return after the period prescribed under Sub-section (1) by the time allowed within the Sub-section (4).

In the present reference, we find that the return was filed before the assessment was made. Therefore, the above ratio laid down squarely covers the present reference.

In the result, the question is answered in the affirmative and in favour of the assessee and against the Revenue. No order as to costs.