JOGINDER PAUL vs. CIT AAYAKAR BHAGWAN RISHI NAGAR

ITA/342/2004HC Punjab & HaryanaPHHC01051496200425 August 2010Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL7 pages
AI SummaryDismissed

What were the facts?

The assessee, Joginder Paul (HUF), filed an appeal before the Punjab and Haryana High Court against an order of the Income Tax Appellate Tribunal (ITAT) for the assessment year (AY) 1999-2000. The dispute concerns the carry forward of a long-term capital loss of Rs. 1,66,680/- declared in AY 1996-97. The return for AY 1996-97 was filed on December 24, 1996, beyond the due date of August 31, 1996, prescribed under Section 139(1). The assessee sought to set off this loss against long-term capital gains in AY 1999-2000. The Assessing Officer disallowed the set-off, citing non-compliance with Section 139(3). The Commissioner of Income-tax (Appeals) and the ITAT upheld this disallowance. The assessee argued that the loss was implicitly allowed to be carried forward in AYs 1997-98 and 1998-99 as the income returned for those years was accepted.

What did the High Court hold?

The High Court held that the assessee is not entitled to carry forward the long-term capital loss of AY 1996-97. The Court relied on its own decision in Commissioner of Income-tax v. Haryana Hotels Ltd. (2005) 276 ITR 521, which held that a business loss cannot be carried forward unless it has been determined in pursuance of a return filed under Section 139 of the Act. Specifically, to carry forward a business loss, the assessee must submit a return under Section 139(3) and have an assessment made for the year in which the loss was incurred. The Assessing Officer must then notify the assessee in writing the amount of business loss that can be carried forward. In this case, the assessee admittedly did not file a valid return declaring the long-term capital loss within the time prescribed under Section 139(3). The mere filing of subsequent returns for AYs 1997-98 and 1998-99, noting the carry forward of loss, does not create a right in favour of the assessee without a specific order from the Assessing Officer. The assessee's counsel candidly admitted that no such specific order was passed. The Court found that the judgments relied upon by the assessee were not applicable. The question of law was answered against the assessee.

What were the issues?

1. Whether the assessee is entitled to the benefit of carrying forward a loss to be set off in subsequent years even if the return of loss is filed beyond the time prescribed under Section 139(3) of the Income Tax Act, 1961? (Question of law) Assessee's contentions: - The loss for AY 1996-97 was allowed to be carried forward by the Assessing Officer in AYs 1997-98 and 1998-99, and therefore, the ITAT was not justified in disallowing the set-off in AY 1999-2000 without revising the earlier orders. - Relied on judgments: Commissioner of Income Tax v. H.P. Lohia, Saurashtra Cement & Chemical Industries Ltd. V. Commissioner of Income Tax, Gujarat-V, Satyanarayan Bhalotia v. Commissioner of Income Tax, Radhasoami Satsang v. Commissioner of Income-tax, Commissioner of Income-tax v. Lakhani Foodwear Ltd., and Madan Roller Flour Mills v. Commissioner of Income-tax. Revenue's contentions: - The Revenue supported the order of the Tribunal.

Which sections of the Income-tax Act were involved?

Section 260A,Section 139(3),Section 139(1),Section 80,Section 72(1),Section 73(2),Section 74(1),Section 74(3),Section 74A(3)

AI-generated summary — verify with the full judgment below

Income Tax Appeal No., 342 of 2004 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH --- Income-tax Appeal No. 342 of 2004 Date of decision: 25.8.2010 Joginder Paul (HUF) through Karta Rajiv Gupta --- Appellant Versus Commissioner of Income-tax, Ludhiana --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. S.K. Mukhi, Advocate assisted by Ms. Jyoti, Advocate for the appellant-assessee.

Mr. Rajesh Katoch, Central Government Standing Counsel for the respondent-Revenue. --- AJAY KUMAR MITTAL, J.

This appeal under Section 260A of the Income-tax Act, 1961 (for short “the Act’”) has been filed by the assessee against the order dated 12.7.2004, passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B” Chandigarh, (in short “the Tribunal”) in ITA No. 544/CHANDI/2002, for the assessment year 1999-2000. Income Tax Appeal No., 342 of 2004 2 The present appeal was admitted for determination of the following question of law for the opinion of this Court: “Whether the assessee will be entitled to the benefit for carry forward of loss to be set off in subsequent yea

The order continues below.

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