Ita/86/2011 Of M/S.prima Agro Ltd v. The Commissioner Of Income Tax,Ernakulam

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 12TH DAY OF DECEMBER 2011/21ST AGRAHAYANA 1933 ITA.No. 86 of 2011 ( ) ====================== AGAINST ORDER IN ITA.146/2009 DATED 18/01/2011 of I.T.A.TRIBUNAL,COCHINBENCH APPELLANT(S)/APPELLANT IN TA: ======================================= 1 M/S.PRIMA AGRO LTD., PIRMA HOUSE SOUTH KALAMASSERY KOCHI-682 033. BY ADV.SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH SMT.PREETHA S.NAIR RESPONDENT(S)/ RESPONDENT IN T.A. ============= 1 THE COMMISSIONER OF INCOME TAX, ERNAKULAM KOCHI-682 018. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON12-12-2011 , THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA NO.86/2011 APPENDIX APPELLANT'S EXHIBITS ANNEXURE-A :COPY OF ASSESSMENT ORDER FOR 2005-06 ISSUED BY THEASSISTANT COMMISSIONER OF INCOME TAX DATED 26/12/2007 TO THE APPELLANT. ANNEXURE-B :COPY OF ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS) DATED 29/12/2008 ISSUED TO THE APPELLANT. ANNEXURE-C :COPY OF INCOME TAX APPELLATE TRIBUNAL'S ORDER DATED18/01/2011 ISSUED TO THE APPELLANT. //TRUE COPY// jg PA TO JUDGE. C.N.RAMACHANDRAN NAIR & K.VINOD CHANDRAN, JJ. .................................................................... I.T.A.No.86 of 2011 .................................................................... Dated this the 12[th] day of December, 2011. C.R. J U D G M E N T Ramachandran Nair, J. Question raised in the appeal filed by the assessee is whether the Tribunal was justified in confirming assessmentdeclining to carry over unabsorbed loss computed by theAssessing Officer for the year 2005-06. 2.We have heard learned counsel appearing for theappellant and have gone through the orders of the Tribunal. We have heard learned counsel appearing for the 3.The assessee, a limited company, posted income taxreturn for the assessment year 2005-06 through registeredpost on the last date provided for filing the return i.e.31/10/2005. Admittedly, the return so filed throughregistered post on the last day for filing return was received bythe Assessing Officer on 02/11/2005. Even though the returnwas not filed in time under Section 139(1) of the Income Tax The assessee, a limited company, posted income tax I.T.A.No.86/2011 Act (hereinafter referred to as the Act for short) disentitlingthe assessee the benefit of carry forward of unabsorbed loss,by virtue of Section 139(3) read with Section 80 of the Act, theAssessing Officer treated the return as one filed under Section139(4) and determined loss which is at variance with the lossreturned by the assessee. The Assessing Officer declinedpermission to carry forward unabsorbed loss as well asunabsorbed depreciation under Section 80 for the reason thatreturn was not filed in time as required under Section 139(3)of the Act. Even though first appeal was dismissed, theTribunal allowed the 2[nd] appeal filed by the assessee in part byallowing carry forward of unabsorbed depreciation but byrejecting the claim for carry forward of business loss. It isagainst this order of the Tribunal, the assessee has come up inappeal before us. 4.Learned counsel for the assessee has raised thecontention that assessment was completed after issuing noticeunder Section 143(2) of the Act, and so much so, the order I.T.A.No.86/2011 4.Learned counsel for the assessee has raised thecontention that assessment was completed after issuing noticeunder Section 143(2) of the Act, and so much so, the order I.T.A.No.86/2011 issued pursuant to such notice should be treated as a regularassessment entitling the assessee to carry forward unabsorbeddepreciation and business loss. However, the finding of theTribunal is that by virtue of prohibition contained in Section139(3) and Section 80 of the Act, the assessee is not entitledto carry forward unabsorbed business loss, if the return wasnot filed within the statutory period. For easy referenceSections 139(3) and 80 are extracted hereunder:- “Section 139(3) :If any person who hassustained loss in any previous year under the head“Profits and gains of business or loss or under thehead “Capital gains”, and claims that the loss or anypart thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) ofsection 73, or sub-section (1) or sub-section (3) ofsection 74, or sub-section (3) of section 74A, hemay furnish, within the time allowed under sub-section (1), a return of loss in the prescribed formand verified in the prescribed manner andcontaining such other particulars as may beprescribed, and all the provisions of this Act shallapply as if it were a return under sub-section (1)”. “Section 80 :Notwithstanding anything containedin this Chapter, no loss which has not beendetermined in pursuance of a return filed in accordance with the provisions of sub-section (3) ofsection 139, shall be carried forward and set offunder sub-section (1) of section 72 or sub-section(2) of section 73 or sub-section (3) of section 74 orsubsection (3) of section 74A.” What is clear from the above provision is that the assessee shall be entitled to carry forward unabsorbed business lossonly if such loss is computed based on a return filed within thestatutory period provided under Section 139(1) of the Act.Admittedly, in this case, return was filed only on 02/11/2005and the last date provided for filing return was 31/10/2005.So much so, the return filed by the assessee cannot be treatedas a return filed under Section 139(1) and by virtue ofoperation of Sections 139(3) and 80 of the Act the assesseewill not be entitled to carry forward business loss. 5.The question to be considered is whether assessee'sclaim that the completion of regular assessment based onbelated return, entitles the assessee to carry forwardunabsorbed business loss computed by the assessing officer.The bar contained in Sections 139(3) and 80 is only in the I.T.A.No.86/2011 nature of disentitlement for the assessee to carry forwardunabsorbed business loss unless return is filed within thestatutory period. In fact Assessing Officer is entitled tocomplete the assessment based on any return filed in time.Return can be filed at any time within one year from the end ofthe relevant assessment year and such return is also a validreturn based on which assessment can be completed.Therefore, the Assessing Officer was perfectly justified inmaking assessment based on the return filed under Section139(4). In this case the Assessing Officer completed theassessment by refixing business loss in deviation from thereturn filed and also computed unabsorbed depreciation. Inour view, the Tribunal rightly declined assessee's claim forcarry forward of unabsorbed business loss because provisionsof Sections 139(3) and 80 disentitle the assessee to carryforward unabsorbed business loss. However, there is noprovision similar to Section 139(3) or Section 80 prohibitingcarry forward of depreciation computed based on return filed I.T.A.No.86/2011 under Section 139(4). So much so, in our view, the Tribunalrightly granted partial relief to the appellant assessee to carryforward unabsorbed depreciation and not business loss. I.T.A.No.86/2011 under Section 139(4). So much so, in our view, the Tribunalrightly granted partial relief to the appellant assessee to carryforward unabsorbed depreciation and not business loss. The assessee's contention that the assessment completedshould be taken as one based on regular return filed underSection 139(1) has no basis. On the other hand, the Tribunalrightly treated the return as one filed under Section 139(4) andso much so, the assessee was rightly declined the benefit ofcarry forward of business loss based on the belated returnfiled. Consequently, the appeal fails and is dismissed. (C.N.RAMACHANDRAN NAIR, JUDGE) (K.VINOD CHANDRAN, JUDGE) jg