2017 (3) TMI 1225 - AT - Income Tax

Tribunal Upholds Disallowance of Carry Forward Losses Due to Late Tax Return Filing

The Tribunal upheld the decision of the CIT(A) that the short term capital loss claimed by the assessee for A.Y. 2009-10 cannot be carried forward to the ... Short term capital loss carried forward for set off to the succeeding year - claim denied - Held that:- We notice that the heading of section 80 reads as “Submission of return for losses” and section 80 is the section that prescribes the condition for carry forward of losses. It does not use the word “return of loss”. Further the provisions of section 139(3) talks about the loss sustained under the specific heads only. Accordingly we agree with the view of Ld CIT(A) that the short term capital loss sustained by the assessee cannot be carried forward, as the return of income has not been filed as per the provisions of sec. 139(3). Accordingly we uphold the order passed by Ld CIT(A) on this issue. - decided against assessee Issues:1. Whether short term capital loss claimed by the assessee can be carried forward for set off to the succeeding year.Analysis:Issue 1:The appeal pertains to the order passed by the learned CIT(A) regarding the short term capital loss claimed by the assessee for Assessment Year (A.Y.) 2009-10. The Assessing Officer denied the carry forward of the loss due to the return being filed beyond the time allowed under section 139(1) of the Income Tax Act. The assessee challenged this decision, leading to the current appeal.Analysis:The assessee declared a short term capital loss and sought to carry it forward to the succeeding year. The Assessing Officer refused this claim citing the restriction under section 139(3) read with section 80 of the Act. The learned AR argued that since the total income declared was positive, the provisions of section 139(3) and section 80 should not apply. Reference was made to relevant court decisions to support this contention.Analysis:On the contrary, the Departmental Representative argued that section 139(3) and section 80 apply to losses sustained under specific heads like 'profits and gains of business and profession' or 'capital gains,' making them applicable in the present case. The learned CIT(A) analyzed the issue and highlighted the relevant provisions of section 80 and section 139(3) to support the decision.Analysis:The learned CIT(A) emphasized that the filing of a return determining the loss within the prescribed time under section 139(3) is crucial for carrying forward losses. The interpretation of 'return of loss' under section 139(3) was discussed in detail, emphasizing that it applies even if the total income returned is positive. The principles of harmonious interpretation and consistency in statutory provisions were cited to support the decision.Analysis:The Tribunal concurred with the view of the learned CIT(A) that the short term capital loss cannot be carried forward as the return of income was not filed in accordance with the provisions of section 139(3). Consequently, the appeal filed by the assessee was dismissed, upholding the order of the learned CIT(A) on this issue.This detailed analysis of the judgment provides a comprehensive understanding of the legal reasoning and interpretation applied in deciding the issue related to the carry forward of short term capital loss for the assessee.