R.V. Easwar, Judicial Member -
(1.) THE only ground raised in this appeal by the revenue is as under:
That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to allow carry forward of assessed losses as per law in respect of the assessment years 1976-77, 1977-78, 1981-82, 1982-83, 1984-85, 1985-86 and 1986-87 (aggregating in all to Rs. 93,02,292 and accompanied by the loss for the assessment year 1987-88 total amount comes to Rs. 1,04,80,560.
(2.) The assessee's accounting year ended on 31-3-1987. The return of income was filed on 28-12-1987. In the return the assessee declared a loss of Rs. 11,78,263 for the year and also claimed carry forward of the unabsorbed losses and allowances determined in the earlier years, amounting to Rs. 93,02,292. The assessing officer completed the assessment on 30-11-1988 Under Section 143(1) of the Act. He determined the total loss, including the brought forward losses and allowances, at Rs. 1,04,80,560. He, however, made the following observations at the end of the assessment order:
As the return of income filed on 28.12.1987 is not furnished according to the provisions of Section 139(3) of the I.T. Act, the unabsorbed loss of Rs. 1,04,80,560 is not to be carried forward.
Issue D.N. and copy of order.
On receipt of the assessment order, the assessee made a request for rectification of the same by petition dated 24-1-1989. The petition is reproduced below:
Sub : Your order Under Section 143(1) dated 30-11-1988 - Rectification of -Request for.
We are in receipt of a copy of your order Under Section 143(1) referred to above.
At the bottom of the order you have stated that 'as the return was filed on 28-12-1987, the unabsorbed loss of Rs. 1,04,80,560 is not to be carried forward. We respectfully submit that the said observation is not correct and needs to be modified. Under Section 139(1) the return was due to be filed by 31-7-1987, but as the necessary particulars for preparation and submission of the return could not be complied by that time, we submitted an application in the prescribed form on 29-7-1987 requesting for extension of time upto 31-12-1987. The return was filed on 28-12-1987. Therefore, the return was filed within the extended time. Therefore, the loss determined for the year is liable to be carried forward.
Further, the loss of Rs. 1,04,80,560 is not for asst. year 1987-88 alone, but for several years comprised of the following :
Therefore, your observation in the assessment order for this year (Asst. Year 1987-88) denying the carry forward of the past losses and/or depreciation etc. is uncalled for and is of no effect. The same, therefore, needs to be expunged from the assessment order.
As regards the loss for the year under assessment, the same being wholly comprised of unabsorbed depreciation is not hit by the provisions of Section 139(3) and Section 80 and, therefore, has to be carried forward under the provisions of Section 32(2).
We, therefore, request you to kindly rectify your order by expunging the last para of the assessment order reading as 'as the return of income filed on 28-12-1987, the unabsorbed loss of Rs. 1,04,80,560 is not to be carried forward.'
for Shaktigarh Textile & Industries Ltd.
Sd/Illegible (S.K Hada) Managing Director.
The Assessing Officer, however, by order dated 21-2-1990 rejected the petition for rectification. According to him the points mentioned by the assessee in the petition were not mistakes apparent from the record and, therefore, Section 154 of the Act could not be invoked.
(3.) AGGRIEVED by the order dated 21-2-1990 the assessee preferred an appeal to the CIT(A). The CIT(A) was of the view that the Assessing Officer did not have the power to refuse to carry forward the losses which were already determined in the assessments for the earlier years on the ground that the return for the year had not been filed in time. He further took the view that the loss of Rs. 11,78,263 for the year under appeal consisted only of unabsorbed depreciation and unabsorbed investment allowance. He further found that the assessee had applied for extension to file the return of income up to 31-12-1987 by Form No. 6 filed on 29-7-1987 and the Assessing Officer not having rejected the application, it must be taken that the time to file the return was extended and in this view of the matter the return should be taken to be a return filed Under Section 139(3). He, therefore,directed the Assessing Officer (0 to entertain the assessee's claim regarding carry forward of unabsorbed depreciation and unabsorbed investment allowance for the year under appeal and (ii) to allow carry forward of the past losses to the subsequent years. In effect the CIT(A) directed the Assessing Officer to accept the assessee's petition and modify or amend the assessment accordingly.;