IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 12TH DAY OF DECEMBER 2011/21ST AGRAHAYANA 1933 ITA.No. 86 of 2011 ( ) ====================== AGAINST ORDER IN ITA.146/2009 DATED 18/01/2011 of I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT(S)/APPELLANT IN TA: ======================================= 1 M/S.PRIMA AGRO LTD., PIRMA HOUSE SOUTH KALAMASSERY KOCHI-682 033. BY ADV.SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH SMT.PREETHA S.NAIR RESPONDENT(S)/ RESPONDENT IN T.A. ============= 1 THE COMMISSIONER OF INCOME TAX, ERNAKULAM KOCHI-682 018. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 12-12-2011 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA NO.86/2011 APPENDIX APPELLANT'S EXHIBITS ANNEXURE-A : COPY OF ASSESSMENT ORDER FOR 2005-06 ISSUED BY THE ASSISTANT COMMISSIONER OF INCOME TAX DATED 26/12/2007 TO THE APPELLANT. ANNEXURE-B : COPY OF ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) DATED 29/12/2008 ISSUED TO THE APPELLANT. ANNEXURE-C : COPY OF INCOME TAX APPELLATE TRIBUNAL'S ORDER DATED 18/01/2011 ISSUED TO THE APPELLANT. //TRUE COPY// PA TO JUDGE. jg C.R. C.N.RAMACHANDRAN NAIR & K.VINOD CHANDRAN, JJ. .................................................................... I.T.A.No.86 of 2011 .................................................................... Dated this the 12th day of December, 2011. J U D G M E N T Ramachandran Nair, J. Question raised in the appeal filed by the assessee is whether the Tribunal was justified in confirming assessment declining to carry over unabsorbed loss computed by the Assessing Officer for the year 2005-06. 2. We have heard learned counsel appearing for the appellant and have gone through the orders of the Tribunal. 3. The assessee, a limited company, posted income tax return for the assessment year 2005-06 through registered post on the last date provided for filing the return i.e. 31/10/2005. Admittedly, the return so filed through registered post on the last day for filing return was received by the Assessing Officer on 02/11/2005. Even though the return was not filed in time under Section 139(1) of the Income Tax I.T.A.No.86/2011 2 Act (hereinafter referred to as the Act for short) disentitling the assessee the benefit of carry forward of unabsorbed loss, by virtue of Section 139(3) read with Section 80 of the Act, the Assessing Officer treated the return as one filed under Section 139(4) and determined loss which is at variance with the loss returned by the assessee. The Assessing Officer declined permission to carry forward unabsorbed loss as well as unabsorbed depreciation under Section 80 for the reason that return was not filed in time as required under Section 139(3) of the Act. Even though first appeal was dismissed, the Tribunal allowed the 2nd appeal filed by the assessee in part by allowing carry forward of unabsorbed depreciation but by rejecting the claim for carry forward of business loss. It is against this order of the Tribunal, the assessee has come up in appeal before us. 4. Learned counsel for the assessee has raised the contention that assessment was completed after issuing notice under Section 143(2) of the Act, and so much so, the order I.T.A.No.86/2011 3 issued pursuant to such notice should be treated as a regular assessment entitling the assessee to carry forward unabsorbed depreciation and business loss. However, the finding of the Tribunal is that by virtue of prohibition contained in Section 139(3) and Section 80 of the Act, the assessee is not entitled to carry forward unabsorbed business loss, if the return was not filed within the statutory period. For easy reference Sections 139(3) and 80 are extracted hereunder:- “Section 139(3) : If any person who has sustained loss in any previous year under the head “Profits and gains of business or loss or under the head “Capital gains”, and claims that the loss or any part thereof should be carried forward 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, he may furnish, within the time allowed under sub- section (1), a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1)”. “Section 80 : Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed in I.T.A.No.86/2011 4 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 (3) of section 74 or subsection (3) of section 74A.” What is clear from the above provision is that the assessee shall be entitled to carry forward unabsorbed business loss only if such loss is computed based on a return filed within the statutory period provided under Section 139(1) of the Act. Admittedly, in this case, return was filed only on 02/11/2005 and the last date provided for filing return was 31/10/2005. So much so, the return filed by the assessee cannot be treated as a return filed under Section 139(1) and by virtue of operation of Sections 139(3) and 80 of the Act the assessee will not be entitled to carry forward business loss. 5. The question to be considered is whether assessee's claim that the completion of regular assessment based on belated return, entitles the assessee to carry forward unabsorbed business loss computed by the assessing officer. The bar contained in Sections 139(3) and 80 is only in the I.T.A.No.86/2011 5 nature of disentitlement for the assessee to carry forward unabsorbed business loss unless return is filed within the statutory period. In fact Assessing Officer is entitled to complete the assessment based on any return filed in time. Return can be filed at any time within one year from the end of the relevant assessment year and such return is also a valid return based on which assessment can be completed. Therefore, the Assessing Officer was perfectly justified in making assessment based on the return filed under Section 139(4). In this case the Assessing Officer completed the assessment by refixing business loss in deviation from the return filed and also computed unabsorbed depreciation. In our view, the Tribunal rightly declined assessee's claim for carry forward of unabsorbed business loss because provisions of Sections 139(3) and 80 disentitle the assessee to carry forward unabsorbed business loss. However, there is no provision similar to Section 139(3) or Section 80 prohibiting carry forward of depreciation computed based on return filed I.T.A.No.86/2011 6 under Section 139(4). So much so, in our view, the Tribunal rightly granted partial relief to the appellant assessee to carry forward unabsorbed depreciation and not business loss. The assessee's contention that the assessment completed should be taken as one based on regular return filed under Section 139(1) has no basis. On the other hand, the Tribunal rightly treated the return as one filed under Section 139(4) and so much so, the assessee was rightly declined the benefit of carry forward of business loss based on the belated return filed. Consequently, the appeal fails and is dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (K.VINOD CHANDRAN, JUDGE) jg