Law:

Section:

Section 72, read with sections 139(1) and 139(4) of the Income-tax Act, 1961 - Losses - Carry forward and set off of business losses - Assessment year 1984-85 - For relevant year, assessee filed a return declaring loss, beyond time allowed under section 139(1) but within time allowed under section 139(4) - Assessing Officer assessed assessee at 'nil' loss without allowing benefit of carry forward of same to be set off against future income on ground that return was not filed within time - Whether since between 1971 and 1989, amended section 139(3) empowered Assessing Officer to extend time for furnishing a return of loss intended to be carried forward, assessee was entitled to carry forward its business loss as return was filed within time allowed under section 139(4) - Held, yes FACTS For the assessment year 1984-85, the assessee-company filed its loss return on 24-7-1985, i.e. beyond the time allowed under section 139(1). The Assessing Officer assessed the assessee at 'nil' loss without allowing the benefit of carry forward of the same to be set off against the future income on the ground that the return was not filed within time. On appeal, the Commissioner (Appeals) held that since the return was filed within the time allowed under section 139(4), the assessee was entitled to the benefit of carry forward and set off of the business loss in the subsequent assessment year. On revenue's appeal, the Tribunal upheld the order of the Commissioner (Appeals). On reference: HELD Prior to 1971, sub-section (3) of section 139 did not empower the Assessing Officer to extend the time for furnishing a return of loss. However, between1971 and 1989, the amended sub section (3) empowered the Assessing Officer to extend the time since in the Taxation Laws (Amendment) Act, 1970, it was provided that carry forward of losses may be permitted to an assessee if he has furnished a return of loss 'within the time allowed under sub-section (1) or within such further time which, on an application made in a prescribed manner, the ITO, may in his discretion allow'. With effect from 1-4-1989, the Direct Tax Laws (Amendment) Act, 1987 came into force, which again restored the old…

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