Carry forward of business loss allowed where belated return was treated as valid under the Income-tax Act.

A return filed before assessment was completed and within the period permitted under section 139(4)(a) of the Income-tax Act was treated as a valid return for the purposes of claiming carry forward of business loss. Applying the principle in CIT v. Kulu Valley Transport Co. P. Ltd., the return was regarded as filed within time despite not being within section 139(3), because it was furnished within two years from the end of the assessment year. The assessee was therefore entitled to carry forward the loss.

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Issues: Whether the assessee was entitled to carry forward business loss despite filing the return after the time prescribed under section 139(3) of the Income-tax Act, 1961, and whether such return could be treated as filed within time for the purposes of section 72.

Analysis: The assessment year was 1982-83 and the return was filed on 6 July 1983, which was within two years from the end of the assessment year. Under section 139(4)(a) of the Income-tax Act, 1961, a return furnished before the assessment is completed and within the prescribed period is treated as a valid return. Applying the principle recognised in CIT v. Kulu Valley Transport Co. P. Ltd., the return had to be regarded as filed within time so as to enable the assessee to claim carry forward of loss.

Conclusion: The issue was decided in favour of the assessee, and the assessee was held entitled to carry forward the loss.

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