TAX CASE No.25 OF 1991 (Against the order dated 29.11.1990 passed by Judicial Member, Income Tax Appellate Tribunal, Patna Bench, Patna in R.A.No.32 (Pat)/1990 I.T.A.No.262 (Pat)/1989 for the assessment year 1984-85) ------- LOKSHAKTI PRAKASHAN (PRIVATE) LIMITED,PATNA--------------Petitioner Versus THE INCOME TAX OFFICER,CIRCLE-1,WARD-E PATNA---------Respondent --------- For the Petitioner : Mr. D.V.Pathy, Advocate. For the Respondent : Mr. L.N.Rastogi, Senior Advocate, Mr. S.K.Sharan, Advocate. P R E S E N T THE HON'BLE MR. JUSTICE CHANDRAMAULI KR. PRASAD THE HON'BLE MR. JUSTICE JAYANANDAN SINGH ------- C.K.Prasad,J: Lok Shakti Prakashan Private Limited (hereinafter referred to as the „Assessee‟) filed return of its income on 10th of March, 1986 of the assessment year 1984-85. It did not file application (Form No.6) seeking extension of time to file the return. However, assessee filed the revised return on 8th of December, 1986. The Income-tax Officer completed the assessment on 2.3.1987 and did not allow the business loss to be carried forward under Section 80 of the Income-tax Act. Assessee preferred appeal against the order of assessment disallowing the business loss to be carried forward before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) set aside the assessment order on the ground that the assessment order ought to have been passed on 2 the fresh return filed by the assessee and in its opinion once a revised return is filed, the original return ought to have been held to be withdrawn. While doing so it observed as follows : “Once a revised return is filed, the original return must be taken to have been withdrawn and should have been substituted by fresh return for the purpose of assessment. On this ground alone, therefore, the assessment required to be set aside as the assessment made by the ITO on the basis of the return originally filed was not a proper assessment.” As regards the carry forward of the business loss, the Commissioner of Income Tax (Appeals) held that the right to carry forward of the loss cannot be denied to the assessee. Its observation in this regard is as follows : “I find, however, that the contention of the assessee regarding carry-forward of the loss is also in order as till the amendment was made to the provisions of section 80, it was held in a number of cases that the return of loss filed beyond the period allowed under the sub-section 1 was also a valid return conferring on the assessee, a right to carry- forward of the loss. This, therefore, cannot be denied to the assessee for this year.” The Commissioner of Income-tax carried the matter in appeal before the Patna Bench of the Income Tax Appellate Tribunal (hereinafter referred to as the „Tribunal‟) which allowed the appeal and held that the assessee shall not be entitled to carry forward of the business loss. While doing so it observed as follows : “Now, this provision came into force from 1.4.85. Though the assessment year in question is 84-85, after 1.4.85, the assessee 3 would not be entitled to the benefit of carry forward of losses if it had not filed the return under sub-section (1) of section 139 or within such further time as may be allowed by the ITO. The present return which was filed on 10.3.86 would not entitle the assessee to the benefit of the carry forward of the business loss because the assessee neither filed any application in form No.6 nor was the return filed before 1.4.85 when the law relating to the assessee‟s right to carry forward of the business losses was amended to his disadvantage. The direction of the CIT(A) allowing carry forward of business loss is, therefore, not in accordance with law and is set aside.” The Tribunal, at the instance of the assessee, had drawn the statement of case and referred the following questions of law for our opinion : “(i) Whether on the facts and in the circumstances of the case the Tribunal was correct in law in holding that the business losses could not be carried forward as the revised return itself was purportedly filed after 1.4.1985 ? (ii) Whether on the facts and in the circumstances of this case the Tribunal was erred in law in not appreciating the real import of the revised return and thereby holding that the claim of carry forward of business loss was not in order ? (iii) Whether on the facts and in the circumstances of this case the benefit of carry forward of losses allowed in pursuance of the original return stood forfeited merely because a revised return claiming further benefit by way of carry forward of unabsorbed depreciation was filed after 1.4.1985 ? (iv) Whether the expression “w.e.f. 1.4.1985 in section 80 of the Income-tax Act” means assessment year 1985-86 and as such the amendments made in section 80 of the Income-tax Act, 1961 with effect from the 4 said date did not preclude the assessee from claiming the benefit of carry forward of business loss pertaining to the assessment year 1984-85 ? (v) Whether the Tribunal was correct in law in holding that due to non filing of the return within the period as specified in sub-section (1) of section 139 or within such extended period as allowed by the assessing officer, the assessee‟s right to carry forward business loss was not in order? (vi) Whether the Tribunal was correct in law in holding that since the law relating to carry forward of business of business losses was amended with effect from 1.4.1985, filing of a revised return on 10.3.1986 could not entitled the assessee to claim the benefit of carry forward of business loss ?” Mr.D.V.Pathy, appearing on behalf of the assessee submits that unabsorbed business loss ought not to have denied on the ground that the assessee had filed the return on 10th of January, 1986. In support of the submission, Counsel has placed reliance on a decision of the Supreme Court in the case of Commissioner of Income-Tax, Punjab v. Kulu Valley Transport Co. P. Ltd. [77 ITR 518] and our attention has been drawn to the following passage from the said judgment ,which reads as follows : “Thus, a return submitted at any time before the assessment is made is a valid return. In considering whether a return made is within time sub-section (1) of Section 22 must be read along with sub-section (3) of that section. A return whether it is a return of income, profits or gains or of loss must be considered as having been made within the time prescribed if it is made within the time specified in section 22(3). In other words, if section 22(3) is complied with, section 22(1) also must be held to have been complied 5 with. If compliance has been made with the latter provision the requirements of section 22(2A) would stand specified. On behalf of the revenue, it is pointed out that a great deal of inconvenience will result if a voluntary return can be entertained at any time in accordance with section 22(3) when loss is involved and in order to give the assessee the benefit of the carry forward of the loss a number of assessments would have to be reopened. It is difficult to accede to such an argument merely on the ground of inconvenience. Moreover, it is common ground that a voluntary return cannot be filed beyond the period specified in section 34(3) of the Act. It cannot be overlooked that even it two views are possible the view which is favourable to the assessee must be accepted while construing the provisions of a taxing statute.” He points out that the Bombay High Court in the case of Shri Panchaganga Sahakari Sakhar Karkhana Ltd. v. Commissioner of Income-Tax, Poona [119 ITR 590] had followed the aforesaid decision of the Supreme Court and observed as follows : “The assessee is a co-operative society engaged in the business of manufacture of sugar and having its factory at Ichalkaranji. We are concerned in this reference with the assessment year 1960-61. Now, as far as question No.1 is concerned, it appears to us to be unnecessary to set out the facts giving rise to this question inasmuch as both Counsel are argued that the answer to be given to this question is concluded in favour of the assessee by the decision of the Supreme Court in CIT v. Kulu Valley Transport Co. P. Ltd. [1970] 77 ITR 518. It is accordingly agreed that the question will, in accordance with the decision, be required to be answered in the affirmative and in favour of the assessee.” 6 Mr.L.N.Rastogi representing the revenue, however, contends that the assessee had filed the return beyond the due date and there being no application for extension of time to file the return, assessee was not entitled to carry forward of the business loss. In support of the submission, reliance has been placed on a decision of the Supreme Court in the case of Kumar Jagdish Chandra Sinha (by Legal Representatives) v. Commissioner of Income-Tax [220 ITR 67] and our attention has been drawn to the following passage from the said judgment, which reads as follows : “The first question is whether a person who files a return under section 139(4) is entitled to file a revised return before the assessment is made. We think not. The furnishing of a revised return is provided by sub-section (5) of section 139. According to this sub-section “any person having furnished a return under sub- section (1) or sub-section (2)” may furnish a revised return at any time before the assessment is made if he discovers any omission or any wrong statement in the original return. The very fact that this right is given to a person who has filed a return under sub-section (1) or sub-section (2) of section 139 means by necessary implication that such a right is denied to a person who files the return under section 139(4).” Having appreciated the rival submission, I do not find any substance in the submission of Mr. Pathy and the decisions relied on are clearly distinguishable. Section 80 of the Income-tax Act, at the relevant time, read as follows : “80. Submission of return for losses. Notwithstanding anything contained in this 7 Chapter, no loss which has not been determined in pursuance of a return filed [within the time allowed under sub-section (1) of section 139 or within such further time as may be allowed by the Income-tax Officer] 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 sub-section (3) of section 74A].” Section 80 of the Income-tax Act (hereinafter referred to as the „Act‟) before its amendment by Tax Law Amendment Act 1984 read as follows : “80. Submission of return for losses. 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 sub-section (3) of section 74A].” From a plain reading of Section 80 of the Act, existing after amendment, it is evident that after 1st of April, 1985 loss which has not been determined in pursuance of the return filed within the time allowed under Section 139(1) of the Act or within such further period as may be allowed by the Income-tax Officer shall not be allowed to be carried forward. Section 80 of the Act starts with a non-obstante clause and in no uncertain terms it provides that notwithstanding anything contained in the said chapter no loss which has not been determined in pursuance of the return in accordance with the provisions of Section 139(1) of the Act or within such further period as may be 8 allowed can be allowed to be carried forward. Accordingly, my answer to the first question is in the negative in favour of the revenue and against the assessee and it is held that the business loss was not fit to be carried forward as the revised return was filed after 1.4.1985. In view of my answer aforesaid, the third and the fifth question have to be answered in favour of the revenue and against the assessee. I am of the opinion that because of the fact that the return claiming benefit by way of carry forward, unabsorbed depreciation having been filed after 1.4.1985, same was not fit to be carried forward. Mr.Pathy contends that though the revised return was filed on 1.12.1986 before passing of the assessment order on 2.3.1987 and hence revised return out to have been treated to have been filed in time. According to him, once a revised return is filed, the original return must be taken to have been withdrawn and fresh return should have been considered to have been filed within time. I do not have the slightest hesitation in rejecting this submission of the learned Counsel. The date of filing the revised return cannot date back to the date of filing of the original return in the face of the language of Section 80 of the Act, as amended by Tax Law Amendment Act 1984. Once it is held so, it cannot be said that the Tribunal erred in law in not appreciating the real import of the revised return and holding that the claim of carry forward of business loss was not in order. 9 Accordingly, answer to the second question is also in the negative against the assessee and in favour of the revenue. Mr.Pathy submits that by Tax Law Amendment Act, 1984, the expression within the time allowed under sub-section 1 of section 139 of the Act or within such further time as may be allowed by the Income-tax Officer was inserted with effect from 1.4.1985 and, as such, the said amendment shall apply from the assessment year 1985-86 and that shall not preclude the assessee from claiming the benefit of carry forward of business loss pertaining to the assessment year 1984-85. Mr.Rastogi, however, contends that the aforesaid rider was inserted with effect from 1.4.1985 by the Tax Law Amendment Act, 1984 and as such shall cover the assessment year 1984-85. The submission made by Mr.Pathy does not commend me. It is not disputed that the last day for submission of the return is later than coming into force of the aforesaid amendment in Section 80 of the Act. It is further not in dispute that the assessee had not filed the return within the time allowed under sub-section 1 of section 139 of the Act or for that matter time to file the return was extended by the Income-tax Officer and the assessee had filed the return within the extended time. Having not done so, in the face of language of Section 80 of the Act, no loss which has not been determined is fit to be carried 10 forward. In view of the clear language of Section 80 of the Act, I am of the opinion that Section 80 of the Act as amended by Tax Law Amendment Act, 1984 with effect from 1.4.1984 shall preclude the assessee from claiming the benefit of carry forward of business loss pertaining to the assessment year 1984-85. Accordingly, the fourth substantial question of law is decided against the assessee and in favour of the revenue and it is held that in view of the amendment in Section 80 of the Act with effect from 1.4.1985, the assessee is precluded from claiming the benefit of carry forward of business loss pertaining to the assessment year 1984-85. Reference is answered accordingly. Tax case stands disposed off. Let a copy of our opinion be sent to the Patna Bench of the Income Tax Appellate Tribunal. (Chandramauli Kr.Prasad, J.) Jayanandan Singh, J : I agree. ( Jayanandan Singh, J.) Patna High Court, Dated, 16th December, 2008. NAFR/Narendra/