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Section 72 of the Income-tax Act, 1961 - Losses - Carry forward and set off of business losses - Assessment year 1976-77 - ITO disallowed assessee's claim for carry forward of loss on ground that assessee had not filed return within time allowed under section 139(3)-Whether where return was filed within extended period, ITO was bound to take that return into consideration, and if net result of computation under 'profits and gains of business' was loss, same had to be carried foward to following year, if not set off in relevant year - Held, yes FACTS For the assessment year 1976-77, the ITO disallowed the claim for carry forward of loss on the ground that the assessee had not filed the return within the time allowed under section 139(3). On appeal, the AAC, following the Supreme Court's decision in the case of CIT v.Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518 , held that the loss had to be allowed and the assessee was entitled to carry forward of the said loss. On the revenue's appeal, the Tribunal, while upholding the AAC's order, held that the amendment of section 139, which came into force on 1-4-1976, did not alter the principles laid down by the Supreme Court. On reference: HELD The return was filed within the extended period. This was not in dispute. The Supreme Court has held that the ITO is bound to take such a return into consideration. That is what the Tribunal had done in this case. Now according to section 72, the loss has to be computed and carried forward where the net result of the computation under the head 'Profits and gains of business or profession' was gain or loss to the assessee. There could not be any dispute that as a result of the computation, the assessee had suffered a loss. Such loss had to be either set off in the very year of assessment or if it could not be set off wholly or in part, the amount which could not be set off had to be carried forward. Hence, the assessee was entitled to carry forward of loss, as claimed. Accordingly, the order of the Tribunal was to be upheld. CASES REFERRED TO CIT v. Kulu Valley Transport Co. (P.) Ltd. [1970] 77 ITR 518 (SC), Presidency Medical Centre (P.) Ltd. v. CIT [1977] 108 ITR…

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