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Income Tax Appellate Tribunal, “B” Bench, Mumbai
Before: Shri B.R. Baskaran (AM)& Shri Ravish Sood (JM)
The appeal filed by the assessee is directed against the order dated 5.12.2012 passed by the learned CIT(A)-32, Mumbai and it relates to A.Y. 2009-10. The assessee is aggrieved by the decision of the learned CIT(A) in holding that the short term capital loss of ` 10,34,489/- claimed by the assessee cannot be carried forward for set off to the succeeding year.
We have heard the parties and perused the record. The assessee filed her return of income for A.Y. 2009-10 on 29.9.2009 i.e. beyond the time allowed u/s. 139(1) of the Act. The assessee declared short term capital loss of ` 13,86,765/- and sought to carry forward the same to the succeeding year. The short term capital loss was ultimately revised to ` 10,32,489/- during the course of assessment proceedings. Since the return of income has been filed beyond the period specified u/s. 139(1) of the Act, the Assessing Officer
2 Smt. Neeta Samir Mehta refused to allow carry forward of loss in view of the restriction placed u/s. 139(3) read with section 80 of the Act. The assessee challenged the decision of the Assessing Officer by filing the appeal before the learned CIT(A), but could not succeed. Hence, the assessee has filed this apepal before us.
Learned AR submitted that the assessee declared total income of ` 3,20,200/- and hence return filed by the assessee could not be considered as “return of loss”. Accordingly, he contended that the provisions of section 139(3) read with section 80 will not apply to the instant case. He also referred to the decisions rendered by Hon’ble Supreme Court in the case of CIT Vs. Harprasad & Co P Ltd (1975)(99 ITR 118) and by Hon’ble Karnataka High Court in the case of Kareemsons (P) Ltd (198 ITR 543).
On the contrary, learned Departmental Representative submitted that the provisions of section 139(3) and section 80 deals with the “loss sustained under the specific head”, namely “profits and gains of business and profession” or “capital gains” and hence both the provisions shall squarely apply to the facts of the instant case.
We notice that the learned CIT(A) has analyzed the issue in detail and for the sake of convenience, we extract below the relevant observations made by the learned CIT(A) :-
“3.3 I have considered the arguments of the Ld AR and perused the provisions of section 80 and 139(3) which read as under :-
Section 80: Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed [in accordance with the provisions of sub-section (3) of section 139] shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or [sub-section (1) or sub-section (3) of section 74] [or sub- section (3) of section 74A].
Section 139(3):
3 Smt. Neeta Samir Mehta
(3) If any person, who [****] has sustained a loss in any previous year under the head "Profits and gains of business or profession" or under the head "Capital gains" and claims that the loss or any part thereof should be carried forward under subsection (1) of sect/on 72 or sub-section (2) of section 73, or [sub-section (1) or sub-section (3) of section 74],2-[or sub- section (3) of section 74A], he may furnish, within the time al/owed under sub-section (1)[***], a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1).
The pain reading of section 80 suggest that loss which can be carried forward is only such loss which has been determined as per the return filed in accordance with provisions of section 139(3) meaning thereby that for every loss to be carried forward, the filing of return which determines such loss, within a time prescribed under the provisions of section 139(3) is a must. The decisions in case of Kulu Valley Transport Co. Pvt. Ltd. 77 ITR 518 (SC) and Kareemsons (P) Ltd 64 Taxman 200 (Kar) are distinguishable on facts as well as law prevailing at that time as they relate to asstt. years prior to 1/4/1989 when the expression "in accordance with the provisions of sub-section (3) of section 139" was not present in section 80 which deals with carry forward of losses. It is only after amendment of section 80 w.e.f 1/4/89 that the carry forward has been linked to provisions of section 139(3) also.
The plea of the assessee that u/s. 139(3) it is mentioned that the assessee may furnish a return of loss would mean that the section 139(3) applies only where total income returned is a loss and not in cases where the total income returned is positive income though there is loss which has been sustained by the assessee under the head business or profession and or other income, is not correct. The legislature in its wisdom has in section 139(3), instead of using the expression " If any person has returned a loss" has used expression" If any person who has sustained a loss" which suggests that provisions of section 139(3) will apply even where assessee has 'sustained a loss' irrespective whether the total income returned by the assessee is a loss or not. Further section 139(3) seeks to put restriction of carry forward of losses only qua business income or capital gain only whereas the total income of any assessee would comprises of all heads of income including salary, income from house property, business, capital gains, income from other sources, etc. Thus it is clear that the legislature has deliberately not used the words total income or loss in the return while putting restriction under 139(3) and it has selectively applied provisions of 139(3) qua only two heads of income i.e. 'business or profession' or 'capital gains'. This further reinforces the argument that for the purpose of claiming benefits u/s. 139(3), the return computing
4 Smt. Neeta Samir Mehta loss under business or capital gains has to be filed within time specified under section 139(1), irrespective of total income ultimately returned by the assessee. The principles of harmonious interpretation as enunciated in the case of Kalyan Singh Solankhi 39 ITR 522 (Born) stipulate that a true meaning of any passage in statute is that which best harmonizes with each passage of the statute to make it consistent as the whole statute The Supreme Court also in the case of Hindustan bulk carriers 249 ITR 449(SC) held that statute or any enacting provision therein must be so construed as to make it effective and operative and one provision of the act should be construed with reference to the other provision in the same act so as to make it consistent enactment of whole statute. Following ratio of the above decision it is clear that meaning of the expression 'return of loss' as used in the context of the provisions of section 139(3) has to be necessarily construed as return qua loss under the head income from business or profession or capital gains and not qua total income only as offered in return. If it is not interpreted so, then it may lead to absurd results because then a person showing nominal positive total income with huge amount of loss under business/capital gains would be still entitled to carry forward such loss even if return is beyond time limit prescribed under section 139(1), whereas another person under same situation of delayed return, who does not have any other income except loss under business/capital gains would become disentitled to carry forward such loss u/s 139(3). The mischief sought to be avoided by bringing provisions of 139(3) will therefore be defeated in the former case leading to absurdity. Therefore the provisions of section 139(3) will apply even to the case where there is a loss under the head business/profession or capital gains, even if the total income returned is a positive income. Hence the short term capital loss computed by assessee shall not be allowed to be carried forward as the original return was filed beyond time u/s 139(1).”
We notice that the heading of section 80 reads as “Submission of return for losses” and section 80 is the section that prescribes the condition for carry forward of losses. It does not use the word “return of loss”. Further the provisions of section 139(3) talks about the loss sustained under the specific heads only. Accordingly we agree with the view of Ld CIT(A) that the short term capital loss sustained by the assessee cannot be carried forward, as the return of income has not been filed as per the provisions of sec. 139(3). Accordingly we uphold the order passed by Ld CIT(A) on this issue.
5 Smt. Neeta Samir Mehta
In the result, the appeal filed by the assessee is dismissed.
Order has been pronounced in the Court on 22.3.2017.