Income Tax Appellate Tribunal - Madras
Sujani Textiles (P) Ltd. vs Assistant Commissioner Of Income Tax on 20 January, 2003
Equivalent citations: [2004]88ITD317(MAD), (2004)84TTJ(MAD)696
ORDER
O.K. Narayanan, A.M.
1. This appeal is filed by the assesses. The relevant assessment year is 1992-93. The appeal is filed against the order of the CIT(A), Coimbatore, dt. 7th Oct., 1994 and arises out of the assessment completed under Section 143(3) of the IT Act, 1961.
2. The due date, for filing of the return for the impugned assessment year under Sections 139(1) and 139(3) was 31st Dec., 1992. The assessee having incurred loss for the previous year relevant to the assessment year under appeal, it filed loss return under Section 13913) on 31st Dec., 1992, i.e. within the time allowed by law. Thereafter the assessee-company filed a revised return showing a higher amount of loss. The revised loss return was filed on 24th Sept., 1993. The time-limit for filing the revised return under Section 139(5) is 31st March, 1994. So, the revised loss return also was filed by the assessee-company within the time permitted by law. The assessment under Section 143(3) was completed on 31st March, 1994.
3. But inspite of the assessee having been filed a revised loss return, the AO completed the assessment on the basis of the original return and without taking cognizance of the higher amount of loss reflected in the revised loss return filed by the assessee. It was the case of the assessee before the AO that as the revised return was filed by the assessee-company well before the completion of the assessment under Section 143(3), and also within the time allowed under Section 139(5) of the Act, the revised return filed by the assessee ought to have been considered for completing the assessment.
4. In first appeal, the CIT(A) held that the revised return filed by the assessee on 24th Sept., 1993, could not be treated as a return under Section 139(3), inasmuch as it has not been filed in time and the assessee could not get the benefit of carry forward of the loss at a higher amount claimed as per the revised return. He held therefore that the assessing authority was justified in restricting the claim of loss as per the original loss return filed by the assessee-company.
5. Shri K. Raghu, the learned chartered accountant appearing for the assessee-company submitted that the assessee had written back in the credit side of its P&L a/c the excess depreciation that had been charged for the earlier years. While preparing the original return, the depreciation so written back was added to the income by an oversight. It was in these circumstances that the loss was required to be recomputed and the assessee was constrained to file a revised return of loss. He contended that when the revised loss return was available before the assessing authority before passing the order under Section 143(3), he should have acted on the basis of the revised loss return filed by the assessee-company. The learned chartered accountant further contended that once the assessee has filed the loss return under Section 139(3) of the Act, thereafter the said loss return takes the colour of a return filed under Section 139(1) and therefore the assessee has the right to file a revised return under Sub-section (5) and so the AO should have acted upon the revised return of income. The learned chartered accountant relied on the principles laid down by the Hon'ble Gujarat High Court in Shri Vallabh Glass Works Ltd. v. ITO and Ors. (1995) 212 ITR 433 (Guj) wherein the Hon'ble Court has held that when the Act permits the filing of a revised return, it is expected to be considered by the assessing authority, if the same is filed before the order is made by it; otherwise the very purpose of giving such a right would be frustrated.
6. Shri M. Narayanan, the learned Departmental Representative contended that even though the assessee had filed the original loss return under Section 139(3) within the time allowed by the statute, the revised loss return was filed beyond the time-limit provided in that section. The learned Departmental Representative further submitted that the benefit of carry forward of loss would be available only to the loss determined in pursuance of a return filed in accordance with the provisions of Sub-section (3) of Section 139. He stated that the said sub-section does not make any provision for filing of a revised return. The provision for filing of revised return is contained in Sub-section (5) thereof, according to which a return filed under Sub-section (1) or a return filed in pursuance of a notice issued under Sub-section (1) of Section 142 alone could be revised through filing a revised return thereafter. As the assessee is claiming the benefit of carry forward of loss, it should be treated in the light of a return filed under Section 139(3) r/w Section 80. If the assessee pleads that by virtue of Sub-section (3), the return filed under that subsection is to be treated as if a return filed under Sub-section (1) of Section 139, then the assessee would lose the benefit of carry forward of loss, because of the operation of Section 80, wherein a loss return filed under Sub-section (3) alone is to be considered for determining the quantum of loss that could be carried forward. The learned Departmental Representative submitted that the provisions of law contained in Section 139(1), 139(3) and Sub-section (5) and Section 80 need to be read together and if read together, it would be clear that a revised loss return filed after the expiry of the period provided under Section 139(3) cannot be considered for determining the loss under Section 139(3).
7. We heard both sides in detail. An assessee is eligible to claim the benefit of carry forward of unabsorbed business loss on condition that a return of loss is filed under Section 139(3). This condition is laid down in Section 80 of the IT Act. Section 139(3) enables an assessee to file a loss return. Once a return is filed under Section 139(3), for the procedure of assessment, the said assessment is deemed as a return filed under Section 139(1). Once a return filed under Section 139(3) is treated as a return under Sub-section (1), the assessee gets the benefit of filing a revised return under Sub-section (5). The revised return is to be filed within the time provided for it. Therefore, it is permissible to read Sub-section (3) along with Sub-section (5) of Section 139. When read so, it is to be seen that it is permissible to file even a revised return. Whether the revised return is a loss return or an income return, it has to be filed within the time-provided. Once a revised return is filed under Sub-section (5), it replaces the return earlier filed by the assessee. If the assessee has filed a return under Sub-section (1), filing of the revised return under Sub-section (5) replaces the original return filed under Sub-section (1). Likewise, if the assessee has filed the loss return under Sub-section (3), and when a revised loss return is filed under Sub-section (5), the revised loss return replaces the original loss return filed under Sub-section (3). Therefore it is not proper to presume that there is no provision for filing a revised loss return. The only point to be looked into is whether the revised loss return was filed within the time provided under Sub-section (5) of Section 139. By filing a revised loss return under Sub-section (5), the factum of filing a loss return under Sub-section (3) is not lost, but what happens if the revised return replaces the original return. That procedural process provided under Section 139 does not in any way affects Section 80 or vice-versa. The equation between Section 139(3) and Section 80 is independent. Section 80 provides that the loss determined by an AO in pursuance of the loss return filed under Section 139(3) shall be carried forward for the succeeding assessment years. The operation of Section 80 ends there. The inter se relation between Sub-sections (1), (3) and (5) of Section 139 does not have an equation or inter-linkage with Section 80 of the IT Act. Therefore, if the assessee has filed a loss return under Sub-section (3) of Section 139 within the period provided under the Act, and if the assessee has filed a revised loss return under Sub-section (5) thereof, again within the prescribed time-limit, the AO is bound to take cognizance of the revised return, because the original return is replaced by the revised return.
8. This principle has been highlighted by the Hon'ble Gujarat High Court in the decision in Shri Vallabh Glass Works Ltd. 's case (supra) wherein the Hon'ble Court has held that when the Act permits the filing of a revised return, it is expected to be considered by the assessing authority, if the same is filed before the order is made by it; otherwise the very purpose of giving such a right would be frustrated.
9. In the facts and circumstances of the case, we direct the AO to redetermine the loss to be carried forward on the basis of a revised loss return filed by the assessee. We also make it clear that Section 80 of the IT Act has nothing to do with the carry forward of depreciation, because depreciation is to be carried forward by the independent operation of Section 32, Sub-section (2).
10. In the result, the appeal filed by the assessee is allowed. Order accordingly.