1991 (1) TMI 203 - AT - Income Tax

Summary

Issues:
1. Carry forward of loss and depreciation determined for the year under consideration.
2. Validity of reassessment proceedings under section 147.
3. Interpretation of section 80 for carrying forward losses.
4. Treatment of unabsorbed depreciation under section 32(2) and section 80.

Detailed Analysis:

1. The main issue in this appeal was regarding the assessee's claim for the carry forward of loss and depreciation determined for the year under consideration. The Assessing Officer disallowed the carry forward of loss as the return was not filed under section 139, but in response to a notice under section 148. The CIT(Appeals) upheld this decision. The Tribunal found that the assessee failed to prove the filing of any return other than the one in response to the notice under section 148. Consequently, the Tribunal rejected the claim for carry forward of loss.

2. The Tribunal addressed the argument raised by the Departmental Representative regarding the initiation of reassessment proceedings under section 147. The reasons recorded by the Assessing Officer were challenged, contending that there was no income escaping assessment, thus making the assessment invalid. However, the Tribunal held that the revenue could not challenge its own action in initiating the proceedings under section 147 after the assessment was made. The Tribunal cited legal precedents to support its decision and rejected the revenue's contentions.

3. The interpretation of section 80 of the Income Tax Act was crucial in determining whether the loss in question could be carried forward. The Tribunal analyzed the provisions of section 80, which stated that a loss must be determined in pursuance of a return filed under section 139 to be carried forward. The Tribunal examined the arguments presented by both the assessee and the Departmental Representative regarding the filing of returns under section 139 and section 148. Ultimately, the Tribunal concluded that a return of loss filed under section 148 could not be considered equivalent to a return filed under section 139(3) for the purpose of carrying forward losses.

4. Lastly, the Tribunal considered the treatment of unabsorbed depreciation under section 32(2) and section 80. The assessee contended that depreciation determined should be carried forward under section 32(2) and not governed by section 80. The Tribunal agreed with this argument, citing legal precedents and the specific provisions of the Income Tax Act. Consequently, the Tribunal allowed the appeal partially, directing the carry forward of depreciation determined for the relevant assessment year in accordance with sections 32(2) and 72(2) of the Act.