Carry forward of business loss remains available where the return is filed within the extended statutory time

A return filed within the extended time under section 139(4) can satisfy the statutory requirement for carrying forward business loss when sections 139(1), 139(3), 139(4), 72(1) and 80 are read together. The Court followed the earlier view that the benefit of carry forward is not defeated merely because the return was not filed by the original due date, so long as it was filed before completion of assessment and within the extended statutory period. On that basis, the assessee was held entitled to carry forward the loss, and the issue was answered in favour of the assessee.

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Issues: Whether the assessee was entitled to carry forward business loss when the return was filed within the extended time permitted under section 139(4) of the Income-tax Act, 1961, though not within the time prescribed under section 139(1).

Analysis: The return had been filed before completion of assessment. The Court followed the earlier view that sub-sections (1) and (4) of section 139 must be read together, and that the benefit of carry forward of loss is available where the return is filed within the time allowed under section 139(4). The same principle had already been applied while considering the corresponding question under the 1961 Act, relying on the ratio that the rule governing carry forward of loss is not defeated merely because the return was not filed within the original due date, so long as it is within the extended statutory time.

Conclusion: Yes. The assessee was entitled to carry forward the loss, and the question was answered in favour of the assessee and against the Revenue.

Ratio Decidendi: For the purpose of carrying forward loss under the Income-tax Act, 1961, a return filed within the extended time under section 139(4) satisfies the statutory requirement when sections 139(1), 139(3), 139(4), 72(1), and 80 are read together.

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