Gujarat High Court
Principal Commissioner Of Income Tax vs Babubhai Ramanbhai ... on 17 July, 2017
Author: Akil Kureshi
Bench: Akil Kureshi, Biren Vaishnav
O/TAXAP/493/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 493 of 2017
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PRINCIPAL COMMISSIONER OF INCOME TAX 1,....Appellant(s)
Versus
BABUBHAI RAMANBHAI PATEL....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
Date : 17/07/2017
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. This appeal is filed by the revenue challenging the judgement of the Income Tax Appellate Tribunal dated 29.08.2016. Following two questions are presented for our consideration:
[A] Whether the Appellate Tribunal was right in deleting Rs.78,89,218/- out of addition of Rs.1,91,12,030/- made by the Assessing Officer in respect of disallowance of interest expense?
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O/TAXAP/493/2017 ORDER
[B] Whether the Appellate Tribunal has not erred
in in facts and circumstances in deleting the addition of Rs.69,96,450/- made by the Assessing Officer by disallowing set off of speculation loss (F & O) as the same was not claimed in the original return but claimed in revised return where the case attracts the provisions of Section 139(3) of the Act?
2. So far as question no. [A] is concerned, by a separate order passed in case of this very assessee in Tax Appeal No. 492 of 2017, we have refused to interfere. Our reasons are as under:
"3. With respect to this question, we notice that the CIT(A) confirms with the Assessing Officer that interest expenditure of Rs. 1.11 crores had to be disallowed. However, the Tribunal noted that the advances were made by the assessee to one Kanak Castor Products Private Limited. Kanak Castor was declared as the highest bidder for purchase of assets of a company in liquidation by the Gujarat High Court. To facilitate the purchase, the assessee had also purchased 4.79 crores shares out of 500 crores shares of the company i.e. Kanak Castor. The Tribunal, therefore, found that such advances were made for the purpose of business. We do not find any error in the view of the Tribunal. This question is, therefore, not considered."
Without recording separate reasons, this question is not considered.
3. So far as question no. [B] is concerned, brief facts are that for the assessment year 2005-06, the assessee filed the Page 2 of 6 HC-NIC Page 2 of 6 Created On Sun Aug 20 20:15:04 IST 2017 O/TAXAP/493/2017 ORDER return of income on 30.10.2005 under Section 139(1) of the Act declaring total income of Rs.53,24,330/-. In such return, the assessee did not claim speculation loss of Rs. 69,93,450/-. Such return was, however, revised under Section 139(5) on 29.11.2006. The Assessing Officer disallowed the carry forward of the speculation loss on the ground that the same was not claimed in the original return but in the revised return. The CIT(A) as well as the Tribunal ruled in favour of the assessee. In particular, the Tribunal was of the view that once a return was revised under Section 139(5) of the Act, the original return filed under Section 139(1) would not survive. It was found that the revised return was filed within the time prescribed. The Tribunal did not accept the Assessing Officer's view that the revised return should be treated as non-est.
4. Before us learned counsel for the revenue placed heavy reliance on the provisions contained in sub-section (3) of Section 139 to contend that an assessee who wishes to carry forward any loss must file a return under sub-section (3) within the time permitted and only upon which the same would be treated as return under Section 139(1) of the Act. Counsel for the revenue submitted that when no return in terms of sub-section (3) of Section 139 claiming carry forward or set off loss was filed, such claim cannot be subject matter of a revised return. Had the assessee filed such return, the possibility of revising such return on finding any error would arise.
5. We may notice that under sub-section (1) of Section 139, every person whose income for the previous year exceeds the Page 3 of 6 HC-NIC Page 3 of 6 Created On Sun Aug 20 20:15:04 IST 2017 O/TAXAP/493/2017 ORDER maximum amount not chargeable to tax, is required to file a return before the due date. Sub-section (3) of Section 139 provides that any person who has sustained a loss and claims that the loss should be carried forward would file a return of loss within the time prescribed under sub-section (1) and thereupon all the provisions of the Act shall apply as if it was a return under sub-section (1) of Section 139 of the Act. Under sub-section 4 of Section 139, a person who has not furnished a return within the time allowed under sub-section (1) may still furnish a return at any time before the end of the relevant assessment year or before the completion of the assessment whichever is earlier. Sub-section (5) of Section 139 provides that any person having furnished a return under sub-section (1) or sub-section (4) discovers any omission or a wrong statement therein, he may furnish a revised return any time before the expiry of one year from the end of relevant assessment year or before the completion of the assessment whichever is earlier.
6. Sub-section (5) of Section 139, therefore, gives right to an assessee who has furnished a return under sub-section (1) or sub-section (4) to revise such return on discovery of any omission or a wrong statement. Such revised return, however, can be filed before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. This is precisely what the assessee did while exercising the right to revise the return. Sub-section (5) of Section 139 does not envisage a situation whereupon revising the return if a case for loss arises which the assessee wishes to carry forward, the same would be impermissible. In terms, sub-section (5) of Section Page 4 of 6 HC-NIC Page 4 of 6 Created On Sun Aug 20 20:15:04 IST 2017 O/TAXAP/493/2017 ORDER 139 allows the assessee to revise the return filed under sub- section (1) or sub-section (4) as long as the time frame provided therein is adhered to and the requirement of the revised return has arisen on discovery of any omission or a wrong statement in the return originally filed. Accepting the contention of the revenue would amount to limiting the scope of revising the return already filed by the assessee flowing from sub-section (5). No such language or intention flows from such provision.
6. The Allahabad High Court in case of Dhampur Sugar Mills Ltd. vs. Commissioner of Income Tax, Delhi Central reported in [1973] 90 ITR 236, in the context of the Income Tax Act, 1922 held that the assessee is given a right to file a correct and complete return if he discovers an error or omission in the return filed earlier. The assessment can be completed only on the basis of the correct and complete return. The earlier return, after a revised return has been filed, cannot form the basis of assessment although it may be used to indicate the conduct of the assessee. There is a clear distinction between a revised return and a correction of return. Once a revised return is filed, the original return must be taken to have been withdrawn and substituted by a fresh return for the purpose of assessment.
7. The Madras High Court in the case of Commissioner of Income Tax vs. Periyar District Co-operative Milk Producers Union Ltd. reported in [2004] 266 ITR 705 held that once the assessee had filed a return claiming carry forward loss under sub-section (3) of Section 139, a revised return could be filed in respect of such a return. We are Page 5 of 6 HC-NIC Page 5 of 6 Created On Sun Aug 20 20:15:04 IST 2017 O/TAXAP/493/2017 ORDER conscious that we are not directly concerned with such a situation.
8. In view of the above discussion, we do not find any error in the view of the Appellate Tribunal. Tax appeal is, therefore, dismissed.
(AKIL KURESHI, J.) (BIREN VAISHNAV, J.) divya Page 6 of 6 HC-NIC Page 6 of 6 Created On Sun Aug 20 20:15:04 IST 2017