COMMISSIONER OF INCOME TAX vs. M/S.COMET DYESTUFF PVT.LTD.

PDF · subscribers
ITR/63/1996HC GujaratGJHC24021743199630 August 2006Author: HONOURABLE MR. JUSTICE M.R. SHAH,HONOURABLE MR. JUSTICE R.S.GARG4 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the Tribunal was absolutely right and justified in deciding the matter in favour of the assessee. The Court relied on its earlier decision in Mehsana Ice And Cold Storage P. Ltd. Vs. Commissioner of Income-Tax, [2005 (2) 75 I.T.R. 601]. In that case, it was observed that the Tribunal would not be justified in denying the benefit of carry forward of business loss simply on the ground that there was no extension of time for filing the return on a second application. If such an application is filed but not decided, the assessee is entitled to presume that the application has been decided in their favour. Therefore, the Tribunal's direction to allow the carry forward of the business loss was upheld. The reference was answered against the interest of the Revenue.

What were the facts?

The assessee, M/s. Comet Dyestuff Pvt. Ltd., was required to file its return of income for Assessment Year 1986-87 by June 30, 1986. The Assessing Officer (AO) granted an extension until August 31, 1986. The assessee filed the return on September 30, 1986, declaring a business loss of Rs. 2,08,209. The AO computed the loss at Rs. 1,50,150 but disallowed its carry forward because the return was not filed by August 31, 1986. The assessee contended that a second application for extension until October 31, 1986, was filed on August 29, 1986, and since the AO did not communicate a decision, the assessee should not be penalized. The Income Tax Appellate Tribunal (Tribunal) ruled in favour of the assessee, leading the Revenue to seek a reference to the High Court.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in directing the AO to allow carry forward of business loss on a belated return? 2. Whether the Appellate Tribunal is right in law and on facts in relying on the presumption on the part of the assessee that it may have been allowed extension of time sought for filing of the return, by the AO? Assessee's Contentions: The assessee argued that it had filed a second application for extension of time on August 29, 1986, seeking an extension until October 31, 1986. As the AO did not communicate any decision on this application, the assessee should not be penalized for the delay. Revenue's Contentions: The Revenue contended that the return was not filed by the extended due date of August 31, 1986, and therefore, the business loss could not be carried forward. The Revenue challenged the Tribunal's decision to allow the carry forward based on the assessee's presumption of an extension.

Which sections of the Income-tax Act were involved?

Section 139

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITR/63/1996 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE NO. 63 OF 1996 For Approval and Signature: HONOURABLE MR.JUSTICE R.S.GARG HONOURABLE MR.JUSTICE M.R. SHAH ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the Civil Judge? ========================================================= COMMISSIONER OF INCOME TAX - Applicant(s) Versus M/S. COMET DYESTUFF PVT.LTD. - Opponent(s) ========================================================= Appearance : MRS. MONA BHATT for MR. MANISH R. BHATT for Applicant(s). None for Opponent(s) though served . ========================================================= CORAM : HONOURABLE MR.JUSTICE R.S.GARG and HONOURABLE MR.JUSTICE M.R. SHAH Date : 30/08/2006

ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE R.S.GARG) The Income Tax Appellate Tribunal, Ahmedabad

ITR/63/1996 2/4 JUDGMENT Bench “C”, at the instance of the Revenue, has referred the following questions for the opinion of this Court arising out of I.T.A. No.4319/Ahd/1989 relating to Assessment Year 1986-87: “1) Whether the Appellate Tribunal is right in law and on facts in directing the A.O. to allow carry forward of business loss on a belated return? 2) Whether the Appellate Tribunal is right in law and on facts in relying on the presumption on the party of the part of the assessee to the effect that it may have been allowed extension of time sought for filing of the return, by the A.O.?”

2.

The Assessee, a business concern, was required to file the return of income under Section-139(1) latest by 30th June, 1986; on an application made to the Assessing Officer for extension of time, time to file the return was extended upto 31st August, 1986 and thereafter, on 30th September, 1986, the Assessee filed the return declaring the business loss of Rs.2,08,209=00. The Assessing Officer computed the loss of Rs.1,50,150/-, as ITR/63/1996 3/4 JUDGMENT the return was not filed on or before 31st August, 1986, the carry forward of loss was not allowed. In the appeal, it was submitted by the Assessee that he had made second application on 29th August, 1986 seeking extension of time upto 31st October, 1986 and as the Assessing Officer did not communicate his order on this application, the Assessee could not be penalised. The Tribunal held in favour of the Assessee, therefore, the Revenue asked for the Reference.

3.

In the matter of Mehsana Ice And Cold Storage P. Ltd. Vs. Commissioner of Income-Tax, [2005 (2) 75 I.T.R. 601], the Division Bench of this Court has observed that the Tribunal would not be justified in denying the benefit of carry forward of business loss simply on the ground that there was no extension of time for filing the return, on the second application. The Court observed that if such an application is filed but not decided, then, the Assessee would be entitled to presume that such an application has been decided in his favour.

4.

In view of the identical facts, we hold that the Tribunal was absolutely right and justified in deciding the matter in favour of the Assessee. The ITR/63/1996 4/4 JUDGMENT Reference is answered against the interest of the Revenue. The Reference stands disposed of accordingly. No costs. [R.S.Garg, J.] [M. R. Shah, J.] kamlesh*

More judgments on Section 139

All 3,629 judgments and leading authorities on Section 139 →

Recent GST High Court judgments

Search GST case law →