2012 (3) TMI 655 - AT - Income Tax

Appellate Tribunal allows revised return for loss carry forward

The Appellate Tribunal ITAT Cochin allowed the appeal filed by the assessee regarding the filing of a revised return for carry forward of loss. The ... Application of revised return filed under section 139(5) after an earlier return of loss - return of loss filed under section 139(3) deemed to be a return under section 139(1) - entitlement to carry forward of loss where revised return is filed on audited accountsApplication of revised return filed under section 139(5) after an earlier return of loss - return of loss filed under section 139(3) deemed to be a return under section 139(1) - entitlement to carry forward of loss where revised return is filed on audited accounts - Revised return filed under section 139(5) after an earlier return disclosing loss (filed under section 139(1)/139(3) on provisional accounts) is actionable and must be processed for carry forward of losses. - HELD THAT: - The Tribunal accepted the assessee's contention that a provisional loss return filed within the time allowed under section 139(1) (and, insofar as return of loss filed under section 139(3) is concerned, deemed to be a return under section 139(1)) does not exclude the operation of section 139(5). The Madras High Court in Periyar District Co-operative Milk Producers Union Ltd and the Allahabad High Court in Dhampur Sugar Mills Ltd were followed for the proposition that a return of loss filed under section 139(3) is to be treated as a return under section 139(1), and consequently the proviso allowing revision under section 139(5) applies. Applying that principle, the Tribunal held that the revised return filed on audited accounts within the period permitted by section 139(5) must be acted upon and, where justified, the losses claimed in the revised return must be quantified and allowed for carry forward in accordance with law.Order of the authorities below set aside; assessing officer directed to process the revised return filed under section 139(5) and quantify the losses in accordance with law.Final Conclusion: Appeal allowed; revised return filed under section 139(5) to be processed and losses quantified by the assessing officer. Issues involved: Interpretation of provisions u/s 139(1), 139(3), and 139(5) of the Income Tax Act regarding filing of revised return for carry forward of loss.Summary:The Appellate Tribunal ITAT Cochin, comprising Shri N.R.S. Ganesan (JM) and Shri B.R. Baskaran(AM), heard an appeal against the order of Commissioner (Appeals)-I, Trivandrum for the assessment year 2005-06. The assessee had initially filed a return of income showing provisional loss within the time limit u/s 139(1) of the Act. Subsequently, after completing the audit, the assessee filed a revised return disclosing the correct loss within the period provided u/s 139(5) of the Act. The Commissioner of Income-tax(A) held that the revised return cannot be treated as the return since the original return was filed within the due date specified u/s 139(1) of the Act. The assessee relied on judgments of Madras High Court and Allahabad High Court to support their case.On one side, the assessee argued that the revised return filed u/s 139(5) should be considered for carry forward of loss, as the original return was based on provisional accounts. On the contrary, the Departmental Representative contended that the carry forward of loss claimed on the basis of provisional accounts cannot be allowed, hence the revised return should not be considered for this purpose.After considering the submissions and relevant provisions, the Tribunal noted that the assessee had filed the original return of loss based on provisional accounts within the time limit u/s 139(1) and later filed a revised return based on audited statements within the time provided u/s 139(5). Citing judgments of Madras High Court and Allahabad High Court, the Tribunal held that a return of loss filed u/s 139(3) can be rectified by filing a revised return u/s 139(5). The Tribunal emphasized that once a return is filed, all provisions of the Income-tax Act apply as if it was filed u/s 139(1), thereby allowing the applicability of section 139(5) to a return filed u/s 139(3). Consequently, the Tribunal set aside the lower authorities' order and directed the assessing officer to process the revised return filed by the assessee u/s 139(5) for quantifying the losses in accordance with the law.In conclusion, the appeal filed by the assessee was allowed by the Tribunal, and the order was pronounced on March 29, 2012.