COMMISSIONER OF INCOME TAX vs. R B MASTURLAL AND SONS P LTD

ITR/26/1994HC GujaratGJHC24020104199412 August 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI4 pages
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What were the facts?

The assessee, R B Masturlal and Sons P Ltd, filed a return of income for Assessment Year 1985-86 (accounting period 1984) showing a loss of Rs.1,19,280/- on September 27, 1985. The Assessing Officer (ITO) finalized the assessment on December 28, 1987, determining the total loss at Rs.93,587/- but disallowed its carry forward, stating the return was late. The assessee had applied for an extension on June 27, 1985, for the return due on June 30, 1985. The CIT (Appeals) directed the ITO to allow carry forward of the loss, relying on the High Court's decision in CIT vs. Gordhanbhai Jethabhai. The Income-tax Appellate Tribunal upheld this decision. The Commissioner of Income-tax (Revenue) has referred the matter to the High Court.

What did the High Court hold?

The High Court answered the referred question in the affirmative, in favour of the assessee and against the Revenue. The Tribunal was justified in law in directing the Assessing Officer to allow the carry forward of the loss determined. The reasoning is based on the ratio laid down by the High Court in the cases of Commissioner of Income-tax, Gujarat-IV Vs. Gordhanbhai Jethabhai and Mehsana Ice & Cold Storage Pvt. Ltd. (supra). The principle is that if an extension application is filed and there is no adverse response from the Assessing Officer, the assessee is entitled to carry forward the loss, even if the return is filed belatedly. The operative direction is that the reference stands disposed of accordingly, with no order as to costs. No issue was expressly left undecided.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in directing the ITO to allow carry forward of loss determined on the basis of a belated return of income? Assessee's contentions: The judgment does not record any specific contentions made by the assessee before the High Court. However, the CIT (Appeals) and the Tribunal relied on the ratio laid down by the High Court in Commissioner of Income-tax, Gujarat-IV Vs. Gordhanbhai Jethabhai, [1983] 142 ITR 84 (Guj.), holding that the assessee was entitled to carry forward the loss as there was no reply from the Assessing Officer regarding the extension application filed in Form No.6. Revenue's contentions: The Revenue, represented by Ms. M.M. Bhatt, argued that the issue stands concluded by the High Court's decision in Income Tax Reference No.107 of 1993 dated March 15, 2003, in the case of Mehsana Ice & Cold Storage Pvt. Ltd. Vs. Commissioner of Income-tax.

Which sections of the Income-tax Act were involved?

Section 256(1)

AI-generated summary — verify with the full judgment below

ITR/26/1994 1/4 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No.26 of 1994 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ======================================================= 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 R B MASTURLAL AND SONS P LTD - Respondent(s) ======================================================= Appearance : MS MM BHATT for Applicant No(s).: 1. NOTICE SERVED for Respondent No(s).: 1. ======================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI Date : 12/08/2005 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA)

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