Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1983-84, the Tribunal has referred the following questions : "1. Whether the Tribunal was justified in concluding that the loss arising out of premature encashment of cash certificates with U. B. I. to reduce the quantum of overdraft from them in the usual course of business was not revenue loss but capital loss Whether the Tribunal was right in holding that the return for the assessment year 1983-84 having been filed on July 2, 1985, the amended provision of Section 80 effective from April 1, 1985, was applicable and hence the loss determined was not to be carried forward"
(2.) The statement of facts as made out by the Tribunal shows that the assessee-company filed its return voluntarily for the assessment year 1983-84 on July 2, 1985. It claimed a loss of Rs. 11,21,210. According to the assessee-company, no notice was issued either under Section 139(2) or Section 148 of the Income-tax Act, 1961, calling for a return. The assessment was completed under Section 143(3) of the Act, the loss being computed at Rs. 3,69,623 in place of Rs. 11,21,210 as claimed by the assessee in the return. Upon determination of the loss, the Income-tax Officer did not, however, allow the loss to be carried forward because, according to him, the return was not filed within time. Upon appeal, the Commissioner of Income-tax (Appeals) found no merit in the case of the assessee-company that the return was filed voluntarily on July 2, 1985, for assessment year 1983-84 and the assessee was, therefore, entitled to carry forward the loss for set-off against income of the subsequent year or years. The Commissioner of Income-tax (Appeals) held that the provisions of Section 80 of the Act as amended from April 1, 1985, conclusively require the return of loss to be submitted within the time allowed under Section 139(1). Therefore, the return in the case being filed under Section 139(4), the assessee cannot claim the benefit of the loss being carried forward.
(3.) The assessee-company also claimed that the loss incurred by it in encashment of cash certificate with the United Bank of India prematurely for paying off of its debt to the said bank in order to reduce the quantum of bank interest was a revenue loss. The Commissioner of Income-tax (Appeals), however, held that the loss incurred by the assessee-company was capital in nature. The assessee took the matter to the Tribunal in second appeal. It urged before the Tribunal that the loss due to premature encashment of the cash certificates was business loss and was revenue in nature and was allowable. The Tribunal negatived the claim for the loss, concluding that any loss arising out of encashment of investments should be treated as capital loss and in regard to the claim for carry forward of loss as determined by the Income-tax Officer, the Tribunal concluded that, since the return was filed by the applicant-company after April 1, 1985, though it relates to the assessment year 1983-84, the amended provision of Section 80 as effective from April 1, 1985, hits the assessee's case. It disentitled the assessee from the benefit of the carry forward because the return of loss had been filed though voluntarily, yet belatedly, on July 2, 1985.;