ORDER
SHEET IN THE HIGH COURT AT CALCUTTA Special Jurisdiction (Income Tax) ORIGINAL SIDE ITA No.162 of 2003 With ITA No.163 of 2003 THE PEELESS GENERAL FINANCE & INVESTMENT CO LTD Versus THE Commissioner OF INCOME TAX Kolkata – I BEFORE: The Hon'ble’ble JUSTICE GIRISH CHANDRA GUPTA The Hon'ble’ble JUSTICE ARINDAM SINHA Date : 18th February, 2015.
Mr.S.Bagchi, Adv.with Mr.D.Mitra,Adv.For the Appellant Mr.P.K.Bhowmick, Adv.Ms.S.Das De, Adv.For the Respondent The Court : Both the appeals arise out of a common judgment dated 4th March, 2003 passed by the 3rd member of the Income Tax Appellate Tribunal ‘C’ Bench, Kolkata dismissing the appeals preferred by the assessee.
The assessee has come up in appeal.
The assessment years in question were 1985-86 and 1986-87.
The following questions were formulated at the time of admission of the appeals.
ITA No.162 OF2003“i) Whether on the facts and in the circumstances of the case and on a correct interpretation of Sections 80 and 139 of the Income Tax Act, 1961, the Income Tax Appellate Tribunal ‘C’ Bench, Kolkata misdirected itself in law in confirming that the Assessee Company was not entitled to carry forward and set off the business loss of Rs.103,17,30,191/- determined and assessed by the learned Assessing Officer in its case vide his order dated 24th October, 1997 passed in respect of the assessment year 1985-86 ?.
ii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the provisions contained in Section 80 of the Income Tax Act, 1961 are substantive in nature ?.
iii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that there was no restriction in section 24(2) of the 1922 Act corresponding to the restrictions placed under section 80 of the 1961 Act for carry forward and set off of losses and that the decision of the Hon'ble Supreme Court was therefore distinguishable and not applicable to the instant case in the case of CIT versus Kullu Valley Transport Co.PVT.LTD.(1970) 77 ITR (SC).” ITA No.163 OF2003“i) Whether on the facts and in the circumstances of the case and on a correct interpretation of Sections 80 and 139 of the Income Tax Act, 1961, the Income Tax Appellate Tribunal ‘C’ Bench, Kolkata misdirected itself in law in confirming that the Assessee Company was not entitled to carry forward and set off the business loss of Rs.76,46,98,933/- determined and assessed by the learned Assessing Officer in its case vide his order dated 24th October, 1997 passed in respect of the assessment year 1986-87 ?.
ii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the provisions contained in Section 80 of the Income Tax Act, 1961 are substantive in nature ?.
iii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that there was no restriction in section 24(2) of the 1922 Act corresponding to the restrictions placed under section 80 of the 1961 Act for carry forward and set off of losses and that the decision of the Hon'ble Supreme Court was therefore distinguishable and not applicable to the instant case in the case of CIT versus Kullu Valley Transport Co.PVT.LTD.(1970) 77 ITR (SC).” We have heard the learned counsel appearing for the parties.
We are inclined to uphold the order under challenge.
Therefore, elaborate discussion is not required.
The learned Tribunal has in the impugned judgment and order ably discussed all the points involved in the appeals.
The brief facts necessary for disposal of the appeals are as follows: The return for the assessment year 1985-86 was filed by the assessee on 14th October, 1985 declaring an income of Rs.5,14,82,950/-.
The return for the assessment year 1986-87 was filed by the assessee on 30th October, 1987 declaring an income of Rs.3,93,67,310/-.
Both the returns were filed after expiry of the time extended by the Assessing Officer for filing of return.
In the case of assessment year 1985-86 time was granted till 30th September, 1985, while the return was filed on 14th October, 1985, whereas in the case of assessment year 1986-87 time was twice extended and the last of such extended time expired on 31st March, 1987, whereas the return was filed on 30th October, 1987.
The assessment for matter had travelled matter had reached the upto assessment the finality, learned was year 1985-86 Tribunal assessed at and a after the after the net loss of Rs.103,17,30,191/-.
Similarly, for the assessment year 1986-87, the loss was assessed at Rs.76,46,98,933/-.
Question arose whether the assessee was entitled to the benefit of carrying forward the losses.
That question has been answered in the negative.
It is this issue which is to be determined by us in the present appeal for both the assessment years indicated above.
Mr.Bagchi, learned counsel appearing for the appellant/ assessee submitted that the judgment of the Apex Court in the case of CIT versus Kullu Valley Transport Co.PVT.Ltd., reported in (1970) 77 ITR518still holds the field wherein it was held by majority view that “ Section 22(2A) simply says that in order to get the benefit of section 24(2).the assessee must submit his loss return within provision must be the time specified read with section by 22(3) section for the 22(1).That purpose of determining the time within which a return has to be submitted.
It can well be said that section 22(3) is merely a proviso to section 22(1).Thus, a return submitted at any time before assessment is made is a valid return.
In considering whether a return made is within time sub-section (1) of section 22 must be read along with sub-section (3) of that section.
A return whether it is a return of income, profits or gains or of loss must be considered as having been made within the time prescribed if it is made within the time specified in section 22(3).In other words, if section 22(3) is complied with section 22(1) must also be held to have been complied with.
If compliance has been made with the latter provision, the requirements of section 22(2A) would stand satisfied”.
Mr.Bagchi contended that section 139 of the 1961 Act is the equivalent of Section 22 of the 1922 Act.
He added that sub- section (3) of section 139 is in substance equivalent to sub- section (2A) of Section 22.
On the aforesaid basis, he advanced the reasoning that sub-section (4) of section 139 has to be read as a proviso to sub-section (1) of section 139.
Therefore, a return filed before the completion of the assessment has to be treated as a return filed within the time prescribed under sub- section (1) of section 139.
Once that has been done, there is no reason why the loss suffered by the assessee and determined by the Assessing Officer should not be permitted to be carried forward.
He added that section 80 as it stood underwent a cosmetic change with effect from 1st April, 1985.
Even with the aforesaid change when a return was filed within the time provided under sub-section (1) of Section 139 read with the deemed proviso, the benefit of carry forward losses could not have been denied to the asessee.
Prior to 1st April, 1985, Section 80 stood as follows: “Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed under section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) of section 74 or sub-section (3) of section 74A.” With effect from 1st April, 1985, section 80 stood amended as follows : “Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed within the time allowed under sub-section (1) of section 139 or within such further time as may be allowed by the Income- tax Officer, shall be carried forward and set off under sub- section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) of section 74 or sub-section (3) of section 74A.” In support of his submission, he drew our attention to a judgment of the Karnataka High Court in the case of CIT & Another- versus Srinivasa Builders reported in (2014) 369 ITR69(Karnataka).The judgment in the case of CIT –vs-Srinivasa Builders no doubt supports the contention of Mr.Bagchi.
But we are unable to accept the contention of Mr.Bagchi for the following reasons : The judgement in the case of CIT, Punjab v.
Kulu Valley Transport Co.P.LTD.was rendered without having to deal with two provisions namely sub-section 3 of Section 139 and Section 80 of the Income Tax Act.
Sub-section 3 of Section 139 provides as follows : “(3)If any person who has sustained a loss in any previous year under the head “Profits and gains of business or profession” or under the head “Capital gains” and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72 or sub-section (2) of section 73 or (sub-section (1) or sub-section (3) of section
74) or (sub-section (3) of section 74A).he may furnish, whithin the time allowed under sub-section (1).a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1)” Section 80, as amended and as it stood on the relevant day, has been quoted above which is once again set out herein : “Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed within the time allowed under sub-section (1) of section 139 or within such further time as may be allowed by the Incometax Officer, shall be carried forward and set off under subsection (1) of section 72 or sub-section (2) of section 73 or sub-section (1) of section 74 or sub-section (3) of section 74A.” Even if it is contended that sub-section 3 of Section 139 is the successor of sub-section (2A) of Section 22 of the 1922 Act, there can be no denial to the fact that section 80 of the 1961 Act was not there.
Section 80 begins with a non-obstante clause.
Section 80 finds place in Chapter VI.
The assessee obviously is seeking to get benefit of the provisions contained in Chapter-VI.
The provisions of Chapter VI are regulated by section 80 which emphatically lays down that the benefit of carry forward of losses cannot be allowed unless the return has been filed within the time provided in sub-section (1) of Section 139 or within such further time as may be allowed by the ITO.
Admittedly, the assessee did not file return within the time prescribed by sub-section (1) or within the time extended by the ITO.
There is, as such, nothing that the Court can do to assist the assessee.
Mr.Bagchi, after the judgement was dictated, submitted that the returns were filed declaring profits bona fide and advance taxes were circumstance paid in that it support thereof.
transpired that It the was a assessee fortuitous had really suffered loss and therefore, it transpired to be a return of loss but initially it was not a return of loss.
It was a return of income.
Assuming, everything submitted by Mr.Bagchi to be correct there is no wayout to help the assessee from the net of section 80 quoted above.
Further submission was advanced by Mr.Bagchi that section 80 does not apply to the returns declaring income.
This submission is altogether devoid of any merit.
The question to ask is, is the assessee asking for benefit under sections 72,73 and 74 ?.
If the answer is yes, section 80 is bound to apply, whether it is a return of loss or profit ?.
For the aforesaid reasons in both the appeals, the question no.1 is answered in the negative and the question no.2 is answered in the affirmative.
The question no.3 is not material for the purpose of disposal of these appeals.
Therefore, we need not give any answer to it.
Both the appeals are thus dismissed.
(GIRISH CHANDRA GUPTA, J.) (ARINDAM SINHA, J.) km/s.saha