Nicholas Applegate South East Asia Fund Ltd. v. Asst. DIT
(International Taxation)
ITA No. 3875 (Mum.) of 2005
A.Y. : 2001-02. Dated : 23-1-2009
S. 292B r.w. S. 80, S. 139(1) and S. 139(3) — Assessee
company having filed four returns in respect of its four units correctly
disclosing all relevant information without causing any prejudice to Revenue,
such mistake or defect stood removed by operation of S. 292B and consolidated
revised return filed by assessee will relate back to the date of filing of
original returns entitling the assessee to claim carry forward and set off of
loss as claimed in original returns and consolidated in revised returns.
The assessee is a company incorporated in Mauritius under
the Protected Cells Companies Act having four cells/sub-divisions in India.
For the relevant assessment year, it filed separate returns of income in
respect of each cell in India within the time limit prescribed u/s.139(1)
showing short term capital loss and exempt dividend income. Subsequently, the
assessee realised that a consolidated return for all the four divisions was
required to be filed and, accordingly, it filed a revised return incorporating
the incomes/losses of the four divisions. The Assessing Officer treated the
original four returns as invalid and treated the consolidated revised return
as the original return and, since the same was not filed within the time
prescribed u/s.139(1), disallowed the assessee’s claim for carry-forward of
short term capital loss. The CIT(A) allowed the loss to be carried forward.
Since there was a difference of opinion between Members of
the Tribunal, the matter was referred to the Third Member. The Third Member
also held in favour of the assessee. The Third Member relied on the decisions
in the following cases :
(a) Swaran Kanta v. CIT, (1989) 176 ITR 291 (P&H)
(b) CIT v. K. Saraswathi Ammal, (1984) 39 CTR
(Mad.) 35/(1984) 146 ITR 486 (Mad.)
(c) Shirish Madhukar Dalvi v. ACIT, (2006) 203 CTR
(Bom.) 621/(2006) 287 ITR 242 (Bom.)
The Third Member noted as under :
(1) As per Circular No. 179 dated 30th September 1975 of
CBDT, S. 292B has been made to provide against purely technical objections
without substance coming in the way of the validity of assessment
proceedings. It is clear from the language of S. 292B that its aim is to
prevent any return of income, assessment, notice or other proceedings being
treated as invalid merely by reason of any mistake, defect or omission in
such return of income, assessment, notice, other proceedings which are in
substance and effect in conformity with and according to the intent and
purpose of this Act. Substance over form theory is the underlying philosophy
of S. 292B. If in substance and in effect, the return, notice or assessment
is in conformity with or according to intent and purpose of the Act, the
mistake, defect or omission is to be ignored.
(2) If significance of words ‘substance’ and ‘effect’ is
kept in mind, there is no justification to take the four returns separately
and in not considering them together. All the four returns were filed at the
same time with the same Assessing Officer and signed by the same competent
and authorised person. When the total effect of all the four returns is
taken into account, it is clearly found that the assessee did disclose full
information of total loss in time as was needed by the Revenue to compute
assessee’s income/loss. The Revenue has not pointed out any information
needed but not given in the four returns submitted by the four cells.
(3) There was a mistake in filing four returns instead of
one consolidated return of total loss of the assessee company. However, that
mistake, otherwise rendering the returns invalid, is fully taken care of by
provisions of S. 292B.
(4) Four cells of the assessee, by filing four returns,
in which total loss claimed by the assessee was disclosed, did comply in
substance and in effect with the intent and purpose of the Act. It is
nobody’s case that any prejudice was caused to the Revenue because of the
above defect and mistake.
(5) In such a situation, it is not correct to hold that
returns filed earlier were invalid, ineffective and of no legal consequence.
The revised return would, in such circumstances, relate back to the date of
filing of original return. The said return has to be taken along and
considered with the original four returns which contained complete
information for making an assessment. The technical mistake in the four
returns stood removed on filing of the consolidated return. To ignore date
of four returns is to ignore provisions of S. 292B.
The assessee was, therefore, entitled to carry forward such
losses for setting off the same in the subsequent year in terms of the
provisions of S. 80.
