Timely return requirement bars carry forward of business loss when the return is filed late under income-tax law.

A business loss could not be carried forward or set off because the merged company's return for assessment year 2003-04 was filed beyond the time prescribed under section 139(1) of the Income-tax Act, 1961. Losses not determined in lawful proceedings and not supported by a timely return were treated as ineligible for carry forward, and the sanctioned scheme or general overriding-effect argument did not displace this statutory bar on the facts stated. The disputed loss claim was therefore rejected and the disallowance upheld.

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Issues: Whether the business loss pertaining to assessment year 2003-04 could be carried forward and set off in view of the belated return filed by the merged company.

Analysis: The claim for set-off was confined to one component of the merged entity's business loss. The decisive factor was that the return for assessment year 2003-04 had been filed beyond the time permitted under section 139(1) of the Income-tax Act, 1961. Loss not determined in lawful proceedings and not supported by a return filed within the prescribed time could not be recognised for carry forward under the income-tax law. The sanctioned scheme and the general plea of overriding effect were not accepted as a basis to override this statutory bar on the facts of the case.

Conclusion: The claim for carry forward and set-off of the disputed loss was rejected, and the disallowance was upheld.

Final Conclusion: The appeal failed and the Revenue's position prevailed on the limited question of set-off of the disputed business loss.

Ratio Decidendi: A business loss cannot be carried forward and set off unless the return is filed within the time prescribed by section 139(1) of the Income-tax Act, 1961.

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