The assessee filed original return of income showing positive income on 28-10-2005.
This return was processed u/s.143(1) on 15-12-2005. Thereafter, on 28-3-2006, he filed a revised return claiming longterm capital loss Rs.182.27 lakh which he claimed was to be carried forward u/s.74. The Assessing Officer, relying on the decision in the case M. Narendranath (Indl.) v. ACIT, (2005) 94 TTJ 284 (Visakha) and as per the provisions of section 80, declined to allow carry forward of the long-term capital loss.
The CIT(A) upheld the order passed by the Assessing Officer. The Tribunal allowed the carry forward of the long term capital loss claimed by the assessee in the revised return of income. The Tribunal noted as under:
(1) Correct interpretation of section 80, as per the language used by the Legislature, is that condition for filing revised return of loss u/s.139(3) is confined to cases where there is only a loss in the original return filed by the assessee and no positive income and assessee desires to take benefit of carry forward of the said loss.
(2) Section 80 is a restriction on the right of the assessee when the assessee claims that he has no taxable income but only a loss, but does not file the return of income declaring the said loss as provided in s.s (3) of section 139.
(3) The Legislature has dealt with two specific situations (i) u/s.139(1), if the assessee has a taxable income chargeable to tax, then he has a statutory obligation to file the return of income within the time allowed u/s.139(1) and (ii) so far as section 139(3) is concerned, it only provides for filing the return of loss if the assessee desires that the same should be carried forward and set off in future. As per the language used in s.s (3) of section 139, it is contemplated that when the assessee files the original return, at that time, there should be loss and the assessee desires to claim the said loss to be carried forward and set off in future assessment years.
(4) Ss. (1) and (3) of section 139 provide for the different situations and there is no conflict in applicability of both the provisions as both the provisions are applicable in different situations.
(5) Once the assessee declares positive income in the original return filed u/s.139(1), but he subsequently finds some mistake or wrong statement and files a revised return declaring loss, then he cannot be deprived of the benefit of carry forward of such loss.
(6) In the present case, the assessee filed the return of income declaring the positive income and even in the revised return the assessee has declared positive income since the loss in respect of the sale of shares could not be set off inter-source or inter-head u/s.70 or 71.
(7) As per the provisions of s.s (5) of section 139, in both the situations where the assessee has filed the return of positive income as well as return of loss at the first instance as per the time-limit prescribed and, subsequently, files the revised return, then the revised return is treated as valid return.
(8) In the present case, as the assessee filed its original return declaring positive income and hence, subsequent revised return is also valid return and the assessee is entitled to carry forward of long-term capital loss. Therefore, there is no justification to deny the assessee the carry forward the loss.
