TMI Blog1986 (8) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... ances of the case, the assessee-company is entitled to have the relief under section 80J computed in respect of the assessment year 1968-69 in the assessment proceedings of the assessment year 1973-74 and have it carried forward to 1974-75 in which it is set off against the assessee's income ?" In order to appreciate the questions referred to us, it is necessary to notice the facts as found by the Tribunal in the first instance. M/s. Sree Valliappa Textiles Ltd., the assessee, is a Private limited company incorporated under the Companies Act and is engaged in the manufacture of textiles. For the assessment year 1968-69 relevant to the previous accounting year, the assessee did not make any claim for relief under section 80J on the ground there was no profit for that year. But the assessee claimed that relief under section 80J of the Act for the later assessment years 1969-70 to 1972-73 in the assessment proceedings of those years and it claimed that the deficiency computed under section 80J of the Act for the assessment years 1969-70 to 1972-73 should be set off against the income of the assessment year 1973-74. This claim was conceded by the Income-tax Officer. A further claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e subsequent year and that such a claim can be made in any year when there is profit for being adjusted from out of the profits. Section 80J in so far as it is material for our purpose reads : " 80J. (1) Where the gross total income of an assessee includes any profits and gains derived from an industrial undertaking or a ship or the business of a hotel, to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such profits and gains (reduced by the deduction, if any, admissible to the assessee under section 80H H or section 80HHA) of so much of the amount thereof as does not exceed the amount calculated at the rate of six per cent. per annum on the capital employed in the industrial undertaking or ship or business of the hotel, as the case may be, computed in the manner specified in sub-section (A) in respect of the previous year relevant to the assessment year (the amount calculated as aforesaid being hereafter, in this section, referred to as the relevant amount of capital employed during the previous year) : Provided that in relation to the profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deficiency and each such deficiency relates to a different assessment year, the deficiency which relates to an earlier assessment year shall be set off under this sub-section before setting off the deficiency in relation to a later assessment year : Provided further that in the case of an assessee being a co-operative society, the provisions of this sub-section shall have effect as if for the words 'fourth assessment year', the words 'sixth assessment year' had been substituted ........" Sub-section (1) of section 80J of the Act provides that where the gross total income of an assessee includes any profits and gains, there shall be allowed in computing the total income of an assessee, a deduction from such profit and gains " the relevant amount of capital employed during the previous year ". Sub-section (3) of section 80J of the Act provides that where there is deficiency, it shall be carried forward and set off against the profits and gains referred to in sub-section (1) in respect of the previous year relevant to the next following assessment year and if there are no such profits and gains for that assessment year or where such deficiency exceeds such profits and gains, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) and, therefore, a voluntary return showing profit or loss can be filed even after the period mentioned in sub-section (2A) has expired so long as the assessment has not taken place. It was argued on behalf of the Revenue that section 22, prior to its amendment in the year 1953, did not make any provision for the filing of a loss return voluntarily. Section 22(1) only required return of taxable income to be filed and it was only section 22(2) which required the filing of a return of profit or loss in pursuance of the notice by the Income-tax Officer and it was, therefore, by virtue of the provisions of section 22(2A) that a loss return can be filed where a person has not been served under sub-section (2) in order to get the benefit of the carrying forward of the loss under section 24(2). This is provided by sub-section (2A) of section 22. The court explained that the amendment in 1953 seems to have been made to clarify the law about the filing of a return showing loss voluntarily. It was declared that such a return could be validly made and the Income-tax Officer could not have ignored the return and bad to determine these losses. Section 24(2) confers the benefit of losses bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent year, it could not be assumed that the prescribed conditions justifying a claim for exemption under section 84 were also fulfilled, the Tribunal was not competent to hold that the Appellate Assistant Commissioner should have entertained the question of relief under section 84 or to direct the Income-tax Officer to allow the relief. This decision lays down that the claim for rebate should be made before the Income-tax Officer and the conditions prescribed for getting the rebate under section 84 has to be fulfilled in the year in which the rebate is claimed. In Anchor Pressings (P.) Ltd. v. CIT [1975] 100 ITR 347 (All), the assessee had failed to claim the rebate allowed under section 84 of the Act, (now section 80J) as a new undertaking in its return or even at the appellate stage. The question, therefore, was whether the assessee can claim rebate by way of rectification proceedings under section 155. The Allahabad High Court held that it cannot be said that there was any mistake, much less a mistake apparent from the record which would enable the assessee to resort to section 154 of the Act to get relief under section 84 (now section 80J). This case is of no assistance to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uent year who is required to determine whether the loss of previous year may be set off against the profits of that year. This decision is of no assistance to the assessee. The Allahabad High Court in Addl. CIT v. Sheetalaya [1979] 117 ITR 658, the Calcutta High Court in Indian Aluminium Co. Ltd. v. CIT [1980]. 122 ITR 660 and the Madras High Court in CIT v. Bluemount Ceramics Ltd. [1980] 123 ITR 385, have held that deduction was permissible even in case where the claim had not been made in a preceding assessment year in which loss had been sustained but was made in a subsequent year when profits were made against which the deduction could be adjusted. The Andhra Pradesh High Court in CIT v. Veljan Hydrair (P.) Ltd. [1985] 151 ITR 734, has also taken a similar view following the decisions of the High Courts of Allahabad, Calcutta and Madras. In CIT v. Mattoo Worsted Spinning and Weaving Mills (1983] 139 ITR 10210 (J K), the court held that (at pages 1027 and 1028) " the relief under section 80J for the assessment year 1967-68, though not claimed for the purpose of carry forward and set off as provided in section 80J(3) of the Act in that assessment year, could on the facts es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and set off. Section 80, on which reliance was placed, reads: " 80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed under 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) of section 74 or subsection (3) of section 74A. " Section 80 is in Chapter VI which deals with the aggregation of income and set off or carry forward of loss and only regulates that no loss which has not been determined in pursuance of a return filed under section 139, shall be carried forward and set off under section 72(1), section 73(2), section 74(1), section 74A(3) and the other provisions in Chapter VI itself. Section 80 does not regulate the other provisions of the Act. The scheme of section 80J is very clear and does not require that a claim for computation should be made only where there is profit and gain. The section provides that where there is profit and gain, the relevant amount of capital employed during the previous year shall be allowed as a deduction in the profit or gain and if there is deficiency, it shall be carried forward and set ..... X X X X Extracts X X X X X X X X Extracts X X X X
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