Carry-forward of loss remains available despite missed intervening returns where the original loss return was filed in time.

Section 80 of the Income-tax Act, 1961 requires loss to be determined on the basis of a return filed under section 139(3), but it does not require returns to be filed in every intervening year. Where losses were already reported in time and duly determined for the relevant years, a later failure to file a return in a year with no taxable income does not extinguish the statutory right to carry forward and set off those losses when income arises later. The article thus affirms that the carry-forward entitlement depends on timely original compliance for the loss year, not on continuous filing in non-income years.

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Issues: Whether the assessee was entitled to carry forward and set off loss despite not filing returns in the intervening years when there was no taxable income.

Analysis: Section 80 of the Income-tax Act, 1961 requires that the loss must be determined pursuant to a return filed in accordance with section 139(3). The provision does not require the assessee to file returns in every intervening year. The losses had already been returned in time and determined for the relevant years, and the later failure to file a return in a year when there was no taxable income did not take away the statutory right to carry forward and set off the loss when income subsequently arose.

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

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