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2014 (8) TMI 687 - HC - Income TaxRectification of order – Set off and carry forward of Long Term Capital Loss - Whether the Tribunal was justified in confirming the action of the authorities below in allowing the rectification of subsequent orders without rectifying the initial order from where the dispute in question arose – Held that:- A business loss cannot be carried forward unless it has been determined in pursuance of a return filed u/s 139(1) of the Act - In order to be entitled to carry forward a business loss, the assessee must submit a return u/s 139(3) of the Act which is required to be in terms of section 139(1) of the Act - the assessee had not filed the return for the AY 1996-97 within the time allowed for the return to be filed u/s 139(1) of the Act as the return was filed on December 24, 1996. The Tribunal was rightly of the view that the assessee was not entitled to carry forward and set off of long-term capital loss suffered in the AY 1996-97 in so far as the return of income for that assessment year was not filed within the time allowed u/s 139(1) and, consequently, not in accordance with the provisions of section 139(3) - the long-term capital loss disclosed in the return of income filed for the AY 1996-97 was not permissible to be carried forward and set off in accordance with the relevant provisions of Act. The AO in exercise of his powers u/s 154 modified the unabsorbed depreciation and carry forward of losses pertaining to earlier years - in the AY 1996-97 the figure of loss/unabsorbed depreciation determined earlier could not be modified without modifying the earlier orders in which such loss or unabsorbed depreciation was determined by the AO - There is no mistake alleged in the computation of long-term capital loss in the AY 1996-97 – the loss determined in the AY 1996-97 cannot be modified in the AY 1997-98 - the assessee had sought set off of capital loss suffered in the AY 1996-97 against the long-term capital loss suffered in the AY 1996-97 against the long term capital gain in the assessment year 1997-98 and in the assessment year 1999-2000 - when the mistake was discovered the AO promptly effected rectification u/s 154 for both the AYs after giving opportunity to the assessee, modified the assessment orders for the AYs 1997-98 and 1999-2000 – Relying upon Sirsa Industries v. CIT [1983 (4) TMI 29 - PUNJAB AND HARYANA High Court]- a mistake of law which was glaring and obvious, could be rectified under section 154 – the AO had committed a mistake of law which was glaring and obvious – thus, the AO was justified in rectifying the assessment orders for the AYs 1997-98 and 1999-2000 giving effect to the provisions of section 74 read with section 80 and section 139(3) – Decided against Assessee.
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