1983 (11) TMI 114 - AT - Income Tax

Summary

Issues:
- Disallowance of claim for set off of loss brought forward from earlier years

Analysis:
The appeal centered on the disallowance of the assessee's claim for set off of a loss brought forward from earlier years amounting to Rs. 56,650. The Income Tax Officer (ITO) had rejected the claim on the basis that the return for the earlier assessment years was filed beyond the prescribed time under section 139(1). The assessee contended that the losses from previous years should be adjusted against the profit for the current assessment year. The CIT (Appeals) upheld the ITO's decision, stating that the losses were not determined by the ITO and that the assessee's claim could not be entertained for the current assessment year. However, the Tribunal was of the opinion that the assessee was entitled to the benefit of carry-forward and set off of business losses from earlier assessment years against the profit for the current assessment year.

The Tribunal referred to section 72(1) of the Income Tax Act, 1961, which provides for the carry forward of losses if not wholly set off against income in the current year. The Tribunal emphasized that the assessing officer had a duty to set off the loss carried forward if the conditions in section 72 were fulfilled. Citing the Supreme Court case of Manmohan Das and the Bombay High Court case of Western India Oil Distributing Co. Ltd., the Tribunal reiterated that it is the responsibility of the assessing officer in the subsequent year to determine if the loss from the previous year can be set off against the profits of the current year. The Tribunal concluded that the assessee was indeed entitled to the benefit of carry-forward and set off of business losses from earlier assessment years against the profit for the current assessment year.

The Tribunal dismissed the ITO's argument that the returns were not filed within the specified time under section 139(1) as legally untenable. Referring to the Calcutta High Court case of Presidency Medical Centre Private Ltd. and other court decisions, the Tribunal held that if the return is filed within the time specified by section 139(4), the loss must be determined and carried forward as per section 72(1) of the Act. Consequently, the Tribunal allowed the assessee's claim for carry-forward and set off of business losses from earlier assessment years against the profit for the current assessment year.

In conclusion, the Tribunal allowed the appeal by the assessee, thereby permitting the set off of the loss brought forward from earlier years against the profit for the current assessment year.