MALHOTRA MARKETING P LTD Vs. ASSISTANT COMMISSIONER OF INCOME TAX
INCOME TAX APPELLATE TRIBUNAL
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R. Acharya, Accountant Member -
(1.) THIS appeal is filed by the assessee, against the order of CIT(A) for the assessment year 1986-87 and following grounds have been raised therein:
1. That the Commissioner of Income-tax (Appeals) erred in law in rejecting the assessee-company's contention that, the Business Loss of Rs. 1,21,700 as determined by the Income-tax Officer, in the assessment order dated 28-2-1989 pursuant to the belated return of income filed by the assessee-company is not liable to be carried forward and set off against the Business Income for the subsequent assessment year.
(2.) (a) That the Learned Commissioner of Income-tax (Appeals) erred in Law in not following the Circular No. 469, dated 23-9-1986 of the Central Board of Direct Taxes which clearly lays down in paragraph No. 9.5 that the belated Return of Income filed for the assessment year 1986-87 within the prescribed period under Section 139(3), read with Sections 80 and 157 will not be denied the benefit of carry-forward of Business Loss for the assessment year 1986-87. (Circular Reported in 162 ITR  Statute page 21)
(b) That the Learned Commissioner of Income-tax (Appeals) is not justified in ignoring the beneficial Circular issued by the Central Board of Direct Taxes for the benefit of the assessee as has been held in a number of judicial decisions.
2. In this case, the return was filed on 14-11 -1986 and the total loss was determined by the Assessing Officer at Rs. 1,21,700. It is observed that there is no mention in the order that the loss so determined is carried forward, although the assessment was finalised under Section 143(3). The matter was carried in appeal and before the CIT(A) it was submitted that undoubtedly it was a belated return but the assessee had prayed for extension of time for filing the return as per applications in Form No. 6,dated 27-6-1986 and 30-9-1986. It was also pleaded that the return of income was filed within the extended time prayed for. The CIT(A) dismissed the appeal on the ground that it is a non est return in the eyes of law as per Section 139(10)(d) of the Income-tax Act. According to the CIT(A) as per the new provision inserted with retrospective effect from 1-4-1986, the Assessing Officer has no discretion to extend the time for a loss return. The assessee's submission that the case of the assessee is governed by the provision of Section 139(3) of the Act was turned down by the CIT(A) on the ground that the provision of Section 139(10) is an overriding provision superseding the provisions of Section 139(3). In view of this the CIT(A) held that the Assessing Officer was justified in not allowing the benefit of carryforward and set off of loss against the profit of subsequent years.
Being aggrieved by the CIT(A)'s order the assessee has preferred this appeal to the Tribunal. The learned counsel for the assessee filed a paper book containing copies of Form No. 6, extract of Section 80 and Section 139(3) and Section 139(10) and copy of Board's Circular No. 469, dated 23-9-1986 and submitted that since the assessee had applied for extension of time by filing two applications in Form No. 6 and since the return is filed within the time applied for, the Assessing Officer was not justified in rejecting the claim of carry-forward of loss made by the assessee. In support of his contention the learned counsel for the assessee drew our attention to pp. 1 to 4 of the paper book which are filed in the shape of acknowledgement receipt and Form No. 6. He further contended that the learned CIT(A) has considered the provisions of Section 139(10) but has completely ignored the provision of Section 80, wherein it is provided that 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 Assessing Officer shall be carried forward and set off. He drew our attention to p. 5 of the paper book, i.e., extract from Indian Tax Laws, 1986, Section 80 and pleaded that the provisions are applicable for the assessment year 1985-86 and subsequent assessment years, particularly to 1986-87 which is under consideration. The learned counsel further explained that by the Direct Tax Laws (Amendment) Act, 1987 the power of extension of time was taken away from the Assessing Officer with effect from 1-4-1989 but the same continued during the previous year relevant to the assessment year 1986-87 under consideration. The learned counsel also drew our attention to the amendment in Section 139(3) with effect from 1-4-1987 and pleaded that upto assessment year 1986-87, the provision of extension of time on the basis of an application was available to the assessee and, therefore, the assessee's return should have been treated as filed within the time applied for and extended to. The learned counsel for the assessee, while dealing with new provision of Section 139(10)(d), relied on CBDT Circular No. 469, dated 23-9-1986 particularly on para 9.2 of the Circular wherein it is mentioned that the amendment is effective from 1-4-1987 and will accordingly apply to the assessment year 1987-88 and subsequent years. On the basis of Board's Circular, the representative of the assessee contended that the provisions of Section 139(10)(d) are not applicable to the assessee's case as the assessment year which is under consideration is assessment year 1986-87. In addition to this, it was also pleaded that the Assessing Officer has not actually rejected the return of assessee as invalid under Section 139(10), rather has computed and determined the loss and therefore, Section 139(10) has nothing to do with the loss. According to him, let the matter be looked at from any angle, the provisions of Section 139(10) are not applicable.
(3.) IN order to support the aforesaid contentions and arguments, the learned counsel for the assessee relied on the following decisions :
(i) Calcutta High Court decision in the case of CIT v. Janata Film Exchange (P.) Ltd.  202 ITR 532;
(ii) Andhra Pradesh High Court decision in the case of Palakol Cooperative Sugars Ltd. v. ITO  202 ITR 681;
(iii) Karnataka High Court decision in the case of Sirigeri Kanakappa Shetty & Sons v. CIT  198 ITR 711;
(iv) Supreme Court decision in the case of K.P. Varghese v. ITO  131 ITR 597; and
(v) Kerala High Court decision in the case of CIT v. Aspinwall & Co. Ltd.  204 ITR 225.;
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