COMMISSIONER OF INCOME-TAX vs. SIF STEEL LTD.

ITR/377/1992HC GujaratGJHC24015717199201 February 2005Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MS. JUSTICE HARSHA DEVANI5 pages
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What were the facts?

For the assessment year 1976-77, the assessee, SIF Steel Ltd., was issued a notice under section 148 read with section 147(a) of the Income Tax Act, 1961, on December 18, 1977, and served on January 2, 1978. The assessee filed its return of income on September 1, 1981, declaring a loss of Rs. 37,11,298/-. The Income Tax Officer finalized the assessment on February 26, 1982, determining a total loss of Rs. 36,15,954/- but held that the loss could not be carried forward in view of section 80 of the Act. The CIT (Appeals) allowed the assessee's claim for carry forward and set off of the assessed loss. The Tribunal upheld the CIT (Appeals) order. The Commissioner of Income-tax has filed a reference before the High Court.

What did the High Court hold?

The High Court held that the notice under section 148 of the Act was issued on December 18, 1977, and served on January 2, 1978. This was beyond the period of limitation prescribed under section 139(2) of the Act, which is March 31, 1977, for the assessment year 1976-77. Therefore, the notice under section 148 could not be considered a notice under section 139(2) for all intents and purposes. Furthermore, the periods of limitation for filing a return under section 139(1), 139(3), and 139(4) had also expired by the time the return was filed on September 1, 1981. Consequently, the assessee could not claim that the return was filed under section 139 of the Act. The assessee was therefore not entitled to seek carry forward and set off of losses under section 80 of the Act. The High Court answered both referred questions in favour of the revenue and against the assessee.

What were the issues?

1. Whether the appellate Tribunal was right in law in holding that section 80 of the Income Tax Act, 1961, would be applicable even though the return was filed in response to a notice under section 148, not under section 139. 2. Whether the language of section 80 permits the carry forward of business loss on an assessment made pursuant to a notice under section 148 of the Income Tax Act, 1961. Assessee's contention (as understood from the Tribunal and CIT(Appeals) reasoning): A notice under section 148(1) of the Act, which requires the ITO to include requirements of a notice under section 139(2), should be treated as equivalent to a notice under section 139(2), thus attracting the provisions of section 80 for carry forward of losses. Revenue's contention: A return filed in pursuance of a notice under section 148 cannot be equated with a return filed under section 139. Section 80 applies only to returns filed under section 139. A notice under section 148(1) is not a notice under section 139(2) for the purpose of claiming the benefit under section 80.

Which sections of the Income-tax Act were involved?

Section 80,Section 139,Section 139(1),Section 139(2),Section 139(3),Section 139(4),Section 147(a),Section 148,Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 377 of 1992

For Approval and Signature:

HON'BLE MR.JUSTICE D.A.MEHTA and HON'BLE MS.JUSTICE H.N.DEVANI

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the concerned : NO Magistrate/Magistrates,Judge/Ju

The order continues below.

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