Law:

Section:

Section 72 of the Income-tax Act, 1961 - Losses - Carry forward and set-off of business losses - Assessment year 1987-88 - Whether where no valid return for previous assessment year had been filed by assessee and consequently no assessment could be made, assessee could not be allowed to set-off of business losses of earlier years during assessment year in question - Held yes Section 32 of the Income-tax Act, 1961 - Depreciation - Unabsorbed depreciation - Assessment year 1987-88 - Whether assessee is entitled to get unabsorbed depreciation of earlier years set off in assessment year in question, even if no valid return for previous assessment year had been filed by assessee - Held, yes FACTS The assessee declared loss for the assessment year 1987-88. The Assessing Officer, while passing the assessment order under section 143(3), disallowed brought forward losses and unabsorbed depreciation of earlier assessment years and their set off on the ground that no valid assessment had been made for the earlier assessment year 1986-87. On appeal, the Commissioner (Appeals) partly allowed the same directing the Assessing Officer to recalculate the depreciation by taking written down value as determined on 31-3-1985 and, thereafter, calculate and allow the same for the assessment year in question. On further appeal, the Tribunal directed the Assessing Officer to allow the claim of carry forward of unabsorbed depreciation as well as unabsorbed losses subject to the period of limitation in respect of the unabsorbed losses. On appeal : HELD On a conjoint reading of provisions of sections 72(1), 80, 139(3) and 157, it can be concluded that a business loss cannot be carried forward unless it has been determined in pursuance of a return filed under section 139. In order to be entitled to carry forward of a business loss, the assessee must submit a return under section 139(3) and have an assessment made for the year in which he has incurred the loss. The Assessing Officer has to notify to the assessee by an order in writing, the amount of the business loss as computed by him which the assessee is entitled to have carried forward. Where the business loss determined has not been…

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