TMI Blog2011 (7) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... YAL, R.S. PADVEKAR, JJ. Dr. K. Shivaram and Paras S. Savla for the Appellant. R.K. Jalani for the Respondent. ORDER R.S. Padvekar, Judicial Member. In this appeal the assessee has challenged the impugned order of the Ld. CIT (A)-20, Mumbai dated 20-4-2005 for the assessment year 2005-06. The assessee has taken the following effective ground:- "1. On the facts and circumstances of the case, the learned CIT(A) has erred in confirming the order of ACIT -20(2) refusing carried forward of loss determined under section 74 read with section 80 of Rs. 1,82,27,039. The same may be allowed to be carried forward." 2. The facts which reveal from the record are as under. The assessee is an individual and filed the original return of income under section 139(1) of the Act on 28-10-2005 declaring the total income at Rs. 94,09.046. The said return was processed under section 143(1) of the Act on 15-12-2005. The assessee filed the revised return on 28-3-2006 claiming long-term capital loss at Rs. 1,82,27,039 and the said loss was claimed to be carried forward under section 74 of the I.T. Act. 3. The Assessing Officer has reservation in allowing the claim of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Officer has held that the said claim of the appellant for the carry forward of the loss returned for the first time in his revised return of income is not eligible for carry forward to the next assessment year as per the provisions of section 80 of the Act. The provisions of section 80 relevant for this purpose is reproduced as under:- "Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3)] of section 74 [or sub-section (3) of section 74A". 5. Now, the assessee is in appeal before us. 6. We have heard the rival submissions of the parties and perused the records. The Ld. Counsel took us through the paper book, to demonstrate that there was calculation mistake due to which the loss on the sale of the shares of Philox Pharma Ltd. remained to be claimed in its original return. He further submits that original return filed by the assessee is return of the positive income and even the revised return fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any foreign country; or (v) is the holder of a credit card, not being an "add-on" card, issued by any bank or institution; or (vi) is a member of a club where entrance fee charged is twenty-five thousand rupees or more, shall furnish a return, of his income during any previous year ending before the 1st day of April, 2005, on or before the due date in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed : Provided further that the Central Government may, by notification in the Official Gazette, specify the class or classes of persons to whom the provisions of the first proviso shall not apply: Provided also that every company or a firm shall furnish on or before the due date the return in respect of its income or loss in every previous year : Provided also that every person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, whether incorporated or not, or an artificial juridical person, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year, without giving effect to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-section (1), or within the time allowed under a notice issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier : Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year. (4A) to (4D) ** ** ** (5) If any person, having furnished a return under sub-section (1), or in pursuance of a notice issued under sub-section (1) of section 142, discovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier : Provided that where the return relates to the previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valid return as per section 139(5) as in the revised return, the assessee claimed the long term capital loss and to give benefit of carry forward of said loss. The Assessing Officer placed his reliance on sub-section (3) to section 139, which is already reproduced hereinabove and also section 80 of the Act, which reads as under:- "Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed [in accordance with the provisions of sub-section (3) of section 139], shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) [or sub-section (3)] of section 74 [or sub-section (3) of section 74A]." 9. In the background of these facts, we have to examine whether the assessee is entitled to claim of the carry forward of the long-term capital loss as per the revised return filed on 28-3-2006. We have already stated that the original return was filed by the assessee is well within the time and there is no controversy on this aspect. Subsequently, the assessee filed the revised return and claimed that same is filed under sub-section (5) to section 139. As per the prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 139(1) but subsequently finds some mistake or wrong statement and files revised return declaring loss then can he be deprived of the benefit of carry forward of such loss? In our humble opinion, if we accept interpretation given by the authorities below, it would frustrate the object of section 80. Section 80 is a cap on the right of the assessee, when the assessee claims that he has no taxable income but only a loss but does not file the return of income declaring the said loss as provided in sub-section (3) of section 139. It is pertinent to note here that Legislature has dealt with two specific situations (i) under section 139(1), if the assessee has a taxable income chargeable to tax then it is a statutory obligation to file the return of income within the time allowed under section 139(1). So far as section 139(3) is concerned, it only provides for filing the return of loss if the assessee desires that the same should be carried forward and set off in future. As per the language used in sub-section (3) to section 139, it is contemplated that when the assessee files the original return, at that time, there should be loss and the assessee desires to claim said loss to be carr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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