2004 (2) TMI 58 - HC - Income Tax

Court allows revised returns for carry forward of losses under Income-tax Act, sections 139(3) and 139(5)

Commissioner of Income-Tax Versus Periyar District Co-operative Milk Producers Union Ltd.

The High Court dismissed the appeal, ruling that revised returns can be filed for carry forward of losses under sections 139(3) and 139(5) of the ... Revised return - A bare perusal of sub-sections (3) and (5) of section 139, more particularly the provision contained in section 139(3), makes it clear that a return of loss filed u/s 139(3) may be filed within the time allowed under section 139(1). Once such a return is filed, all the provisions of the Income-tax Act shall apply as if such return has been filed u/s 139(1) - In view of such a specific provision, there is no reason to exclude the applicability of section 139(5) to a return filed under section 139(3) – Thus, Tribunal was right in holding that the assessee could file a revised return u/s 139(5) claiming a higher amount of business loss to be carried forward after filing the return of loss within the due date prescribed u/s 139(3) Issues:1. Interpretation of provisions under sections 139(3) and 139(5) of the Income-tax Act regarding filing of revised returns for carry forward of losses.Analysis:The case involved a dispute regarding the filing of revised returns by a co-operative society for the assessment year 1991-92 to claim the benefit of carry forward of losses. The respondent initially filed a return declaring a loss and later submitted a revised return after final audit, reflecting a higher loss. The Assessing Officer restricted the carry forward based on the original return, which led to an appeal by the respondent. The appellate authority upheld the original return's validity for carry forward purposes, but the Income-tax Appellate Tribunal allowed the revised return filed under section 139(5) to be considered, setting aside previous orders.The main contention raised was whether a revised return under section 139(5) could be filed for a return submitted under section 139(3). The appellant argued that only returns under section 139(1) were eligible for revised returns under section 139(5). However, the High Court analyzed the provisions of sections 139(3) and 139(5) to determine the applicability of revised returns. Section 139(3) allows for filing a return of loss, and once filed, it is deemed as if filed under section 139(1), making all provisions of the Act applicable. Therefore, the Court concluded that there was no reason to exclude the applicability of section 139(5) to a return filed under section 139(3).Additionally, the appellant contended that section 80 of the Income-tax Act did not mention the filing of revised returns for carry forward of losses, implying that only the original return should be considered. The Court rejected this argument, emphasizing that the specific provisions of section 139(3) deemed a return filed under it to be as if filed under section 139(1), thereby making all provisions of the Act applicable. As there was no provision excluding the applicability of section 139(5) to returns filed under section 139(3), the Court dismissed the appeal, stating that no substantial question of law was involved.In conclusion, the High Court dismissed the appeal at the admission stage, ruling that the provisions of sections 139(3) and 139(5) allowed for the filing of revised returns for carry forward of losses, even for returns initially filed under section 139(3), as all provisions of the Income-tax Act are applicable to such returns.