Belated loss return bars carry forward of short-term capital loss and defeats later set-off claim

Belated filing of the AY 2020-21 return prevented carry forward of short-term capital loss under section 80 because the loss was not determined through a return filed in compliance with section 139(3). On that basis, the assessee could not use AY 2024-25 to indirectly revive the denied carry-forward or set off capital gains against that loss. The reliance on Kullu Valley Transport Co. Pvt. Ltd. was found inapplicable on the facts. The set-off claim was therefore not allowable.

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Issues: Whether the assessee was entitled to set off capital gains of AY 2024-25 against carried forward short-term capital losses of AY 2020-21 when the return for AY 2020-21 was filed beyond the time prescribed under section 139(1) of the Income-tax Act, 1961.

Analysis: The return for AY 2020-21 was filed belatedly and no condonation or extension was sought for the delay. Under section 80, a loss cannot be carried forward and set off unless it is determined pursuant to a return filed in compliance with section 139(3). The claim arose from the denial of carry forward in AY 2020-21, and the assessee could not seek in AY 2024-25 to reopen that disallowance or obtain the same benefit indirectly. The reliance on the decision in Kullu Valley Transport Co. Pvt. Ltd. was held inapplicable on the facts.

Conclusion: The set-off of capital gains against the short-term capital losses of AY 2020-21 was not allowable, and the appeal failed.

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