Karnataka High Court
Associated Electro Ceramics vs Chairman, Central Board Of Direct Taxes ... on 1 December, 1988
Equivalent citations: [1993]201ITR501(KAR), [1993]201ITR501(KARN)
JUDGMENT S. Rajendra Babu, J.
1. The petition filed an application under section 119(2) of the Income-tax Act, 1961, seeking a direction to the Income-tax Officer to allow their claim for losses, unabsorbed depreciation and relief by way of investment allowance pertaining to the assessment year 1977-78. The application was disposed of by the Board stating as follows :
"The Ministry of Law has advised that section 119(2)(b) would not cover the case of a belated return on the basis of which loss for the purpose of carrying forward has to be determined and that matter is regulated by section 139, 72, 74 and 157. Section 119(2)(b) speaks of an 'application' or a 'claim' and not a 'return' to be filed beyond time. In this view of the matter, the Board regret their inability to interfere in the matter and to accede to the request of the petitioner. The Petitioner may be informed accordingly."
2. Aggrieved by this decision of the Central Board of Direct Taxes, the petitioner has approached this court.
3. Learned counsel for the petitioner submitted that the Board has rejected their application on irrelevant grounds; in several cases of hardship, the Board has interfered notwithstanding the fact that there is no specific provision to that effect under the Act; and, therefore, the decision made by the Board is not in accordance with law. Learned counsel for the petitioner also referred to Circular No. 446 of December 31, 1985, condoning delay in making refund claims, vide [1986] 157 ITR (St) 50.
4. On the contrary, learned counsel for the respondents submitted that there is no power under the statute to extend time or condone the delay in filling a return inasmuch as under section 80 of the Income-tax Act, no loss which has not been determined in pursuance of a return filed shall be carried forward and set off under the provisions of the Act. It is also submitted that the expression "application or claim" used under section 119 will not take within its sweep a "return". Learned counsel for the Department submitted that merely because the Board might have issued circulars contrary to the Act, this court cannot give a direction to issue any such directions in this case also.
5. What falls for our consideration in this case is the meaning and scope of section 119(2)(b) of the Income-tax Act. Section 119(2)(b) provides that without prejudice to the generality of the power under section 119(2)(c) as follows :
"The Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise the Commissioner or the Income-tax Officer to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law."
6. In the present case, what is sought for is to allow their claim for losses, unabsorbed depreciation and relief by way of investment allowance pertaining to the assessment year 1977-78. The objection raised is that, under section 80, no loss which has not been determined in pursuance of a return shall be carried forward and set off under the different provisions of the Act. The view that the application or claim alone is covered by section 119(2)(b) and not a return may be correct, but it is not necessary to decide that question. Jeevan proceeding on the basis that the said provision covers only a claim or an application, it could be seen that the claim raised in a return that its losses should be carried forward is also a claim, and that such a request cannot be rejected merely on the ground that it is only made in a return and not by a separate application. Therefore, the request made by the petitioner does fall with the scope of the expression "claim". Though it is not a claim regarding exemption or deduction or refund referred to in section 119(2)(b), it is definitely relatable to a claim arising under the category of any other relief available under the Act. The contention of learned counsel for the Department that if no power had been granted to an Income-tax Officer or any other Officer to condone that delay in making such a claim, the Board also cannot extend time, will not be correct, because this provision expressly provides that, where any time limit has been fixed, such time limit can be extended or delay condoned by the Board. Therefore, in my opinion, the Board has approached the mater in too technical a way and the finding that the "application or claim" referred to in section 119(2)(b) does not cover a claim made in a return is not correct and hence the order or endorsement as per annexures C and D shall stand quashed with a direction to the Board to reconsider the matter afresh in the light of the observations made in this order and in accordance with law. Petition allowed. Rule made absolute.