ASSOCIATED EXCAVATORS DORERS PVT. LTD v. INCOME TAX OFFICER
[Citation -1986-LL-1210]

Citation 1986-LL-1210
Appellant Name ASSOCIATED EXCAVATORS DORERS PVT. LTD
Respondent Name INCOME TAX OFFICER
Court ITAT
Relevant Act Income-tax
Date of Order 10/12/1986
Assessment Year 1978-79, 1979-80
Judgment View Judgment
Keyword Tags unabsorbed depreciation • carry forward of loss • period of limitation • revenue authorities • statutory period • voluntary return • business loss • co-operative
Bot Summary: The ITO stated that the return filed on 20th April, 1982 was beyond the period of 2 years prescribed under s. 139(4)(b)(iii) and so it was not a valid return under s. 139. As stated earlier s. 139(4)(b)(iii) states that the return must be filed latest by the end of 2 years from the end of the assessment year under consideration and so the ITO treated the return to be invalid and determined the income at nil ignoring the returned loss. If the assessee was prevented by sufficient cause from filing the return earlier and if the ITO was satisfied about the same, he urged that the returns filed before the assessments were completed should be treated as valid returns even for the purpose of carry forward of the losses. According to him that section is an enabling section available to the ITO has nothing to do with the question as to whether the returns filed were or were not returns under s. 139 of the Act. The question raised in these appeals is as to whether the returns filed after reopening the assessments under s. 146 can be regarded as returns under s. 139. On a bare reading of s. 139(4) we come to the conclusion that the returns under consideration for both the years cannot be said to be returns under s. 139 envisaged under s. 80 of the Act. On a consideration of the law on the point the Tribunal came to the conclusion that the filing of the return during 146 proceedings beyond the time limit prescribed under s. 139 cannot extend the time limit under s. 139 and so the said return could not be said to be a return under s. 139 for the purpose of s. 80 of the Act.


S.N. ROTHO, A.M.: These two appeals filed by assessee are heard together and disposed of by this common order for sake of convenience. assessee is limited company. It follows calendar year as its previous year. For asst. yr. 1978-79 assessment was made under s. 144 on 12th Jan., 1981 for non filing of return. This assessment was cancelled under s. 146 on 18th March., 1981. Therefore, return was filed on 23rd April, 1982 disclosing loss of Rs. 1,25,760. ITO made assessment determining business loss at Rs. 71,244 and depreciation at Rs. 21,518. ITO thus determined total loss for year at Rs. 92,762 which was sum of aforesaid two figures. ITO stated that return filed on 20th April, 1982 was beyond period of 2 years prescribed under s. 139(4)(b)(iii) and so it was not valid return under s. 139. Consequently ITO recorded in assessment order that assessee was not entitled to carry forward loss computed by him. assessee appealed to CIT(A) and contended that loss of Rs. 92,762 determined by ITO should have been allowed to be carried forward. CIT(A) did not agree on ground that loss computed by ITO was not entitled to be carried forward in view of s. 80 of Act which says that no loss which has not been determined in accordance with return filed under s. 139 of Act shall be carried forward. Hence he dismissed appeal. For asst. yr. 1979-80 assessee filed return on 20th April, 1982 disclosing loss of Rs. 1,61,492. It may be mentioned that this return was filed after earlier ex parte assessment was reopened under s. 146 Hence return filed on 20th April, 1982 was beyond period of 2 years reckoned from 31st March, 1980. As stated earlier s. 139(4)(b)(iii) states that return must be filed latest by end of 2 years from end of assessment year under consideration and so ITO treated return to be invalid and determined income at nil ignoring returned loss. assessee appealed to CIT(A) who, however confirmed action of ITO. He observed that return was not filed within time prescribed under s 139. and so it could not be treated as return under s. 139. Consequently, n o loss determined on such return could be carried forward because of provision of s. 80 of Act. Aggrieved by above orders of CIT(A) assessee is in appal before us on one common ground for both assessment years. case of assessee before us, stated by ld. representative for assessee is that assessee was prevented by sufficient cause from filing returns and so assessments were reopened under s. 146. If assessee was prevented by sufficient cause from filing return earlier and if ITO was satisfied about same, he urged that returns filed before assessments were completed should be treated as valid returns even for purpose of carry forward of losses. He urged that returns could not be valid for purpose of making assessments and invalid for purpose of carry forward of losses. According to him, as long as assessments were open it was permissible for assessee to file valid returns. He sought to draw support for this argument from provision of s. 153(2A) of Act which extends period for completing assessment by one year from date of filing return even in cases where return is filed after assessment is reopened under s. 146. Shri S.K. Lahiri, ld. representative for Department on other hand supported orders of Revenue authorities. He stated that s. 153 (2A) merely authorises ITO to complete assessment within one year from date of filing return. According to him that section is enabling section available to ITO has nothing to do with question as to whether returns filed were or were not returns under s. 139 of Act. He stated that s. 139 (4)(B)(iii) is very clear. It lays down limit beyond which no return under s. 139 can be filed. In instant case, returns have been filed beyond limit for both years under consideration. Hence, these returns are not returns envisaged in s. 80 of Act. Consequently assessee was rightly held as having foregone its right to carry forward losses. In this connection he relied on decision in case of ITO vs. Kolhapur Central Co-operative Consumers Stores Ltd. (1933) 4 ITD 243 (Pure). In this case it was held that return filed Stores Ltd. (1933) 4 ITD 243 (Pure). In this case it was held that return filed beyond statutory period prescribed under s. 139(4) is not valid return and so it can not be taken into account for carry forward of loss because of s. 80 of Act. Further he referred to decision in case it was held that voluntary return filed after statutory period of 4 years was not valid return. Shri S.L. Lahiri relied on this decision for preposition that return was filed beyond period prescribed under s. 139(4) of Act and same principle applied to instant case. We have considered contention of both parties as well as facts on record. question raised in these appeals is as to whether returns filed after reopening assessments under s. 146 can be regarded as returns under s. 139. If it can be so regarded, then losses determined on basis of such returns have to be carried forward because of s. 80 of Act which refers only to return under s. 139. On other hand, if it cannot be so regarded, then losses determined on basis of such returns cannot be carried forward because of express provision enacted in s. 80 of Act. We have considered argument based on provision of s. 153 (2A) but we find that it i s relevant for completing assessment. That section extends period of limitation for completing assessments. This has nothing to do with question as to whether returns of type under consideration can be regarded as returns under s. 139. provision of s. 139(4)(b)(iii) is indeed clear. It states that any person who has not furnished return within time allowed under s. 139(1) or s. 139(2) may file return within 2 years from end of relevant assessment year. In instant case, returns have not been filed within this statutory period. So, on bare reading of s. 139(4) we come to conclusion that returns under consideration for both years cannot be said to be returns under s. 139 envisaged under s. 80 of Act. These returns may enable ITO to make assessments but law does not permit assessee to as Department to carry forward losses determined on basis of these returns because of express provision of statute under s. 80 of Act. We find support for this decision of ours in case of Kolhapur Central (supra). In that case, it was held that return filed beyond statutory period is not set in law. Similarly, principle laid down by Allahabad High Court in case of Smt. Parbati Devi (supra) also applied on facts of this case. In that case, it was held that return filed beyond statutory period is not valid return. fact that return was filed voluntarily in that case when seas returns in that instant case were filed in 146 proceedings does not make any difference to aforesaid basic principle. Finally, in fairness to learned representative for assessee we must say that he has place copy of order dt. 20th Feb., 1986 of Tribunal in ITA No. 1339 (Cal)/84 before us wherein this issue has been considered. In that case also return was filed during 146 proceedings by beyond statutory period prescribed. statutory period prescribed under s. 139. On consideration of law on point Tribunal came to conclusion that filing of return during 146 proceedings beyond time limit prescribed under s. 139 cannot extend time limit under s. 139 and so said return could not be said to be return under s. 139 for purpose of s. 80 of Act. We are in respectful agreement with argument given and conclusion arrived at in that case. Further we find that in that case Tribunal has allowed carry forward of unabsorbed depreciation as district from business loss. In that case, CIT(A) has not considered point. Even so Tribunal directed ITO to carry forward unabsorbed depreciation relying on decision in case of CIT vs. Kalkapa Enterprises Pvt. Ltd. (1986)51 CTR (Kar)150: (1956)157 ITR 658 (Kar). We are also in agreement with this decision of Tribunal on this point. In two instant cases, we find that assessee claimed carry forward of business loss as well as unabsorbed depreciation. It is true that sum of these two figures is stated in grounds of appeal without mentioning them separately. However, separate figures are available in assessment order. For above reasons we hold that Revenue authorities were justified in refusing in carry forward business loss on basis of returns filed by assessee but they were not justified in refusing to carry forward unabsorbed depreciation as s. 80 does not speak of unabsorbed depreciation. We direct ITO to allow carry forward of unabsorbed depreciation only. In result, two appeals are partly allowed. *** ASSOCIATED EXCAVATORS DORERS PVT. LTD v. INCOME TAX OFFICER
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