This appeal filed by Department relates to asst. yr. 1979-80. two effective grounds raised in this appeal are as follows: "1. That on facts and in circumstances of case learned CIT (A) has erred in law in directing ITO to carry forward business loss computed for asst. yr. 1979- 80. That learned CIT (A) has erred in not applying provisions of s. 139(3) of Act." For asst. yr. 1979-80, assessee submitted Form No. 6 on 29th June, 1979 and sought extension of time for filing return upto 31st Dec., 1979. return was filed by assessee on 31st Dec., 1979 claiming loss of R s . 1,08,69,070. ITO vide his order dt. 8th Sept., 1982 computed business loss at Rs. 1,01,33,687 but did not pass any order for carry forward of business loss computed by him. On appeal, CIT (A) following decision of Calcutta High Court in case of Presidency Medical Centre (P) Ltd. vs. CIT (1977) 198 ITR 838 (Cal) directed ITO to carry forward business loss computed by him. Aggrieved, Department has come up in appeal before Tribunal. Shri R. R. Bajoria ld. Departmental Representative has contended before us that return filed by assessee on 31st Dec., 1979 could not be treated as valid return under s. 139(1) with result that no direction could have been given for carry forward of business loss computed by ITO. It w s further submitted that return filed by assessee fell within provision of s. 139 (4) with result that provisions contained in s. 139(3) were not applicable in this case. While conceding that ratio of decision of Calcutta High Court in Presidency Medical Centre (P) Ltd. (supra) was in favour of assessee, it was submitted that in view of observations made by Hon'ble Supreme Court in case of Brij Mohan vs. CIT (1979) 12 CTR (SC) 198: (1979) 120 ITR 1 (SC), decision in Presidency Medical Centre (P) Ltd. (supra) should not have been followed by lower appellant authority as observations of Hon'ble Supreme Court was binding upon him. It was further submitted that though application for extension of time for filing return has been made on behalf of assessee, no order were passed on it and so, it could not be said that time for filing return was extended by ITO. ld. Authorised representative for assessee has, on other hand, submitted that since no order were passed by ITO on application made by assessee for extension of time for filing return, time for filing return shall be deemed to have been extended upto 21st Dec., 1979. It was thus submitted that return filed on 31st Dec., 1979 was valid return under s. 139(1) as it was filed within time extended by ITO. It was thus submitted that for this simple reason alone, ITO should have given direction for carry forward of business loss computed by him. second limb of argument advanced before us by assessee was that even if it is assumed for sake of argument that time for filing return was not extended, in that event return filed by assessee was valid return under s. 139(4) with result that by virtue of ratio of decision of Calcutta High Court in Presidency Medical Centre(P) Ltd. (supra) loss had to be determined and carried forward as matter of course under s. 72(1) read with s. 80 of IT Act, 1961. It was further contended that observation of Hon'ble Supreme Court in case of Brij Mohan vs. CIT (supra), relied upon by department was made in different context and did not apply to facts of instant case. We have given our careful consideration on rival contentions and facts on record. We have also gone through authorities cited before us. From assessment order framed by ITO it is apparent that assessee submitted Form No. 6 on 29th June, 1979 seeking extension of time for filing return upto 31st Dec., 1979. assessment order framed by ITO does not say that application was allowed or rejected by him. As matter of fact, it has been stated before us by ld. Departmental Representative that on application seeking extension filed by assessee no order was passed by ITO. Thus, as application submitted in Form No. 6 by assessee seeking extension of time was neither rejected nor allowed by ITO, he shall be deemed to have allowed time prayed for by assessee with result that return filed on 31st Dec., 1979 must be treated as valid return filed under s. 139 (1) within time extended by ITO. In taking this view we stand fortified 139 (1) within time extended by ITO. In taking this view we stand fortified by decision of Bombay High Court in case of Lachman Chaturbhuj Java vs. R. G. Mitsure & Ors. 1981 Tax LR 542 (Bom). It was held in this case that if Department does not desire to grant assessee's application for extension of time, it is duty of Department to inform assessee accordingly well in advance so that assessee is put on his guard that unless he files his return within prescribed time, penal consequences are liable to follow. If Department chooses not to reply to assess s application within time applied for by assessee time is deemed to be extended as prayed for by assessee and he would be justified in assuming that this application has been granted by Department. Even assuming that in instant case, time for filing return shall not be deemed to have been extended by ITO, contention made on behalf of Department must be repelled for reasons to be stated presently. If it is to be held that time for filing return was not extended by ITO in that event return filed by assessee would be valid return under s. 139(4). Calcutta High Court has held in Presidency Medical Centre (P) Ltd. (supra) following decision of Supreme Court in case of CIT vs. Kulu Transport Co. (P) Ltd. that return could be filed within time specified in sub-s. (4) of s. 139 and once that return is filed within that time, it would be deemed to be in accordance with law and then loss had to be determined under relevant provisions of 1961 Act which embodied provision similar to that in s. 24(2) of old Act in this respect. It was further held that assessee was entitled to demand that loss should be determined and carried forward as matter of course. This authority is applicable to facts of case in hand in all force and is binding upon us. observations made by Hon'ble Supreme Court in case of Brij Mohan vs. CIT (supra) relied upon by Department are as under: "A return filed within extended period is good return in sense that ITO is bound to take into consideration. But no where does s.139 declare that where return is filed within extended period it will be deemed to have been filed within period originally prescribed by statute. On contrary, section contains for payment of interest where return is filed beyond prescribed date even though within extended period. That evidence of fact that return is filed during extended period is not regarded by statute as filed originally within time originally prescribed." above observations were made by Hon'ble Supreme Court in entirely different context in case arising out of penalty proceedings drawn u p under s. 271(1) of IT Act, 1961. These observations, in our opinion, do not go to support contention put further on behalf of Department that in case of return filed under s. 139(4) business loss computed by ITO cannot be allowed to be carried forward. For reasons given above, we hold that CIT (A) was justified in directing ITO to carry forward business loss computed by him. In he result, Department appeal fails and is hereby dismissed. *** INCOME TAX OFFICER v. SHALIMAR ROPE WORKS LTD.