Carry forward of business losses can remain available even when the return is filed after the main due date

Section 139(3) has been read by several High Courts and Tribunal decisions to permit carry forward and set-off of business losses even where the return was filed under section 139(4) rather than within section 139(1). The Tribunal followed that settled line of authority and declined to take a contrary view, noting that one cited decision had extended the same benefit even to returns filed under sections 147 and 148. On that interpretation, delay alone did not bar the loss claim.

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Issues: Whether the assessee was entitled to carry forward and set off business losses where the return for the earlier year was filed beyond the time prescribed under section 139(1) but within section 139(4), and whether the department could deny the benefit on the ground of delay.

Analysis: The Tribunal noted that section 139(3) had been construed by several High Courts and by Tribunal decisions to permit carry forward of losses even where the return was filed under section 139(4). It further noticed that one of the cited authorities had extended the same benefit even to a return filed under sections 147 and 148. In view of the settled line of authority, the Tribunal declined to adopt a contrary view on the interpretation of the provision.

Conclusion: The assessee was entitled to the benefit of carry forward and set off of the business loss, and the Revenue's appeals failed.

Ratio Decidendi: A return filed under section 139(4) does not, by itself, bar carry forward and set-off of business losses where the provision has been consistently interpreted to allow such benefit.

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