M/s. SAVITRI ENTERPRISES, MUMBAI V. ITO Wd. - 20(3)-2, MUMBAI

ITA 5074/MUM/2006

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93177 (ITAT-MUMBAI)
• Duration Of Justice: 8 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 22-04-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 25-09-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N V NADKARNI
• Assessee Lawyers: MUKESH B ADVANI
• Keywords: Revised return
• Section: 143(3); 72(1); 142(1); 139(5); 139

Judgement Text

SAVITRI ENTERPRISES ITA NO. 50 74 /MUM/20 06 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI . . , , BEFORE SHRI B R BASKARAN , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JU DICIAL MEMBERITA ITA NO. : 5 0 7 4 /MUM/20 06 ( ASSESSMENT YEAR: 200 3 - 0 4 ) SAVITRI ENTERPRISES, 21 VASAN UDYOG BHAWAN, OPP. PHEONIX MILLS, LOWER PAREL(WEST) MUMBAI - 400 013 .: PAN: AAOFS 2060 A VS ASST . C OMMISSIONER OF I NCOME T AX , CIRCLE - 2 0( 3 ), PI RAMAL CHAMBERS, LALBAUG, MUMBAI - 400 012 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MUKESH B ADVANI RESPONDENT BY : SHRI N V NADKARNI /DATE OF HEARING : 22 - 0 4 - 201 5 / DATE OF PRONOUNCEMENT : 08 - 07 - 201 5 ORDER , . . : PER AMIT SHUKLA, AM : THE A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE A GAINST THE IMPUGNED ORDER DATED 1 8 .0 7 .20 06 , PASSED BY CIT (A) - 3 2 , MUMBAI FOR THE QUANTUM OF ASSESSMENT PASSED U/S 1 4 3 (3) FOR THE ASSESSMENT YEAR 200 3 - 0 4, ON THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD AO HAS ERRED IN NOT ALLOWING CARRY FORWARD OF LOS OF RS. 18,88,015/ - AND THE LD. CIT(APP EALS) HAS FURTHER ERRED IN CONFIRMING THE SAME. 2. THAT THE LD AO OUGHT TO HAVE SEEN THAT THE REVISED RETURN HAS SUBSTITUTED THE ORIGINAL RETURN AND SINCE THE ORIGINAL RETURN WAS FILED IN TIME ALLOWED U/S 139(1) OF I.T. ACT, ASSESSEE IS ENTITLE FOR CARRY FORWARD OF LOSS OF RS. 18,88,015/ - . 2. BRIEFLY STATED RELEVANT FACTS QUA THE ISSUE INVOLVED ARE THAT , THE ASSESSEE HAD FILED ITS ORIGINAL RETURN OF INCOME ON 28.11.2004 SAVITRI ENTERPRISES ITA NO. 50 74 /MUM/20 06 2 U/S 139(1) DECLARING TOTAL INCOME OF RS. 1,11,985/ - . THE SAID RETURN WAS DULY PROCES SED U/S 143(1) ON 31.03.2004. SUBSEQUENTLY, ASSESSEE FILED REVISED RETURN U/S 139(5) ON 05.11.2004 DECLARING TOTAL LOSS OF R S. 18,88,015/ - . THEREAFTER, THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143( 2 ) WAS ISSUED ON 19.11.2004 AND ASSESSM ENT WAS COMPLETED VIDE ORDER DATED 30.12.2005 U/S 143(3) ACCEPTING THE REVISED RETURN, WHEREIN, LOSS OF RS. 18,88,015/ - WAS SHOWN. THUS , NOT ONLY THE REVISED RETURN BUT ALSO THE LOSS SHOWN WAS ACCEPTED BY THE A SSESS ING OFFICER . HOWEVER, THE LD. AO HELD THA T ASSES S EE IS NOT ENTITLED FOR BENEFIT OF CARRIED FORWARD OF SAID LOSS IN TERMS OF SECTION 80 , BECAUSE THE ASSESSEE HAS NOT FILED LOSS RETURN AS PRESCRIBED U/S 80 AND, THEREFORE, THE ASSESSEE LOSES THE BENEFIT OF CARR Y FORWARD. IN SUPPORT OF HIS CONTENTION , HE RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS ITALINDIA COTTO N CO. P. LTD. , REPORTED IN [1988] 174 ITR 160. 3. BEFORE THE CIT(A), IT WAS SUBMITTED BY THE ASSESSEE THAT THE DECISION OF HONBLE SUPREME COURT RELIED UPON BY THE AO IS NOT APPLICABLE AT ALL , AS SAME PERTAINED TO APPLICABILITY OF SECTION 79, WHICH DEALS WITH CARRIED FORWARD AND SET OFF OF LOSSES OF COMPANIES WHEN THERE IS A CHANGE IN SHAREHOLDING PATTERN OF THE COMPANY. IT WAS FURTHER SUBMITTED THAT THE REVISED RE TURN IN THE CASE OF THE ASSESSEE WAS A VALID RETURN, THEREFORE , THE LOSS SHOWN IN THE REVISED RETURN SHOULD BE TREATED AS RETURN U/S 139(1) AND THEREFORE, IN TERMS OF SECTION 139(3) SUCH A LOSS HAS TO BE ALLOWED AND CARRIED FORWARD WITHIN THE MEANING OF SE CTION 80. STRONG RELIANCE WAS ALSO PLACED ON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS PER I YAR DISTRICT CO - OPERATIVE MILK PRODUCERS UNION LTD TO RETURN IN (2004) 26 6 ITR 705. 4. HOWEVER, THE LD. CIT(A) REJECTED THE ASSESSEES CONTENTION AND HELD THAT THE LOSS IS ALLOW ABLE ONLY IF, THE RETURN OF INCOME IS FILED IN TERMS OF SECTION 139(3) R.W.S. 139(1) . SI NCE IN THIS CASE, IN THE RETURN FILED U/S 139(1) THE ASSESSEE HAD DECLARED POSITIVE SAVITRI ENTERPRISES ITA NO. 50 74 /MUM/20 06 3 INCOME OF RS. 1,11,985/ - AND LATER ON IT HAS CLAIMED LOS S ONLY IN THE RETURN OF INCOME FILED U/S 139( 5 ) HENCE, NO CARRY FORWARD AND SET OFF OF LOSS IS ALLOWED TO CARRY FORWARD AS THE SAME IS ALLOWED TO BE CARRY FORWARD IN ACCORDANCE WITH THE PROVISIONS OF SECTION 80 . HE FURTHER HELD THAT THE DECISION OF MADRAS HIGH COURT WILL NOT BE APPLICABLE ON THE FACTS OF THE PRESENT CASE. 5. BEFORE US, LD. CO U NSEL STRONGLY RELIED UPON DECISION OF MADRAS HIGH COURT IN THE CASE OF CIT VS PERIYAR DISTRICT CO - OPERATIVE MILK PRODUCERS UNION LTD ( SUPRA ) AND ITAT MUMBAI BENCH DE CISION IN THE CASE OF RAMESH R SHAH VS AC I T, REPORTED IN [2012] 143 TTJ (MUMBAI) 166 AND SUBMITTED THAT THERE IS NO RESTRICTION UNDER SECTION 139(5) THAT REVISED RETURN CANNOT BE FILED FOR SHOWING LOSS FOR THE FI R ST TIME. ONCE A REVISED RETURN HAS BEEN FIL ED, IT REPLACES THE RETURN FILED U/S 139(1) AND, THEREFORE, SUCH A LOSS IS ALLOWED TO BE CARRIED FORWARD IN TERMS OF SECTION 139(3). ACCORDINGLY, THE LOSS ASSESSED IN TERMS OF REVISED RETURN SHOULD BE ALLOWED TO BE CARRIED FORWARD. 6. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON THE ORDER OF THE CIT(A) AND ALSO REFERRED TO THE VARIOUS OBSERVATIONS BY THE LD. CIT(A) MADE IN THE SAID ORDER. 7. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE FINDING GIVEN IN THE IMPUGNED ORDERS. THE MAIN ISSUE IS , WHET HER THE LOSS WHICH HAS BEEN SHOWN FOR THE FIRST TIME IN THE REVISED RETURN U/S 139(5) CAN BE ALLOWED TO BE CARRIED FORWARD AND SET OFF. IT IS AN UNDISPUTED FACT THAT IN THE RETURN FILED U/S 139(1), THE ASSESSEE HAD FILED POSITIVE INCOME OF RS. 1,11,985/ - . THE SAID RETURN WAS DULY SUBSTITUTED BY REVISED RETURN FILED U/S 139(5). NOT ONLY THAT , THE SAID REVISED RETURN CLAIMING LOSS HAS BEEN DULY ACCEPTED BY THE AO U/S 143(3) . ONCE THE REVISED RETURN HAS BEEN HELD TO BE VALID RETURN , THEN IT SUBSTITUTE S THE RET URN FILED U/S 139(1). THE MAIN CONTROVERSY IS WHETHER IN TERMS OF SECT ION 139(3) ; SUCH A LOSS SHOULD BE ALLOWED TO BE CARRIED FORWARD WITHIN THE PROVISION OF SAVITRI ENTERPRISES ITA NO. 50 74 /MUM/20 06 4 SECTION 80 OR NOT . SECTION 139(3) PROVIDES THAT , IF ANY PERSON HAS SUSTAINED LOSS IN ANY PREVIOUS YEAR UNDER THE HEAD PROFIT 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 U/S 72(1) OR 73(2) OR SECTION 74(1) OR 74(3), HE MAY FURNISH A RETURN OF LOSS WITHIN T HE TIME ALLOWED U/S 139(1) IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER AND OTHER PARTICULARS AS MAY BE PRESCRIBED THEN ALL THE PROVISIONS OF THIS ACT SHALL APPLY AS IF IT WERE A RETURN U/S 139(1). THUS, THE SAID PROVISION STIPULATES THAT T HE CARRY FORWARD OF A LOSS WOULD BE ALLOWED IF THE ASSESSEE HAS FILED THE RETURN OF INCOME WITHIN THE TIME ALLOWED U/S 139(1). SECTION 139(5) PROVIDES THAT IF THE RETURN HAS BEEN FILED U/S 139(1) OR IN PURSUANCE OF N O T ICE U/S 142(1) AND IF ASSESSEE , DISCOV ERS ANY OMIS S ION OR ANY WRONG STATEMENT, HE MAY FURNISH A REVISED RETURN AT ANY TIME BEFORE EXPIRY OF ONE YEAR FROM THE END OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPL E TION OF THE ASSESSMENT, WHICHEVER IS EARLIER. THUS, REVISED RETURN CAN BE FILED ONLY WHEN THE RETURN HAS BEEN FILED U/S 139(1) AND IN CASE WHERE THE RETURN H AS BEEN FILED U/S 139(4) I.E. BELATED RETURN, THEN THE RETURN CANNOT BE REVISED IN TERMS OF SECTION 139(5). THE EFFECT OF REVISED RET U RN U/S 139(5) IS THAT IT CURES THE DEFECT IN THE ORIGINAL RETURN AND THEREBY REPLACES THE RETURN FILED U/S 139(1). FOR ALL PRACTICAL PURPOSES REVISED RETURN IS THE RETURN OF INCOME FILED IN TERMS OF SUB - SECTION (3) OF SECTION 139 . THE SAID SUB - SECTION DOES NOT ENVISAGES THAT IF A REVISED RETURN HAS B EEN FILED U/S 139(5) [ WHICH SU BSTITUTES THE RETURN FILED U/S 139(1) ] THEN, THE LOSS CANNOT BE ALLOWED TO BE CARRIED FORWARD. ONCE THE REVISED RETURN U/S 139(5) REPLACES THE RETURN U/S 139(1), THEN IT PARTAKES THE CHARAC T ER OF RETURN AS IF IT HAS BEEN FILED WITHIN THE TERMS OF SECTION 139(1) I.E. IT HAS BEEN FILED WITHIN THE DUE DATE PRESCRIBED THEREIN. THIS IS BECAUSE , SECTION 139( 5 ) IS APPLICABLE ONLY WHEN RETURN HAS BEEN FILED U/S 139(1) OR IN TERMS OF NOTICE U/S 142(1) AND NOT OTHERWISE. SECTION 80 PROVI DES THAT NO LOSS WHICH HAS NOT BEEN DETERMIN E D IN PURSUANCE OF RETURN FILED IN SAVITRI ENTERPRISES ITA NO. 50 74 /MUM/20 06 5 ACCORDANCE WITH THE PROVISION OF SECTION 139(3) SHALL BE CARRIED FORWARD AND SET OFF UNDER VARIOUS SECTIONS MENTIONED THEREIN. THE CONDITION PRECEDENT FOR CARRIED FORWARD AND SE T OFF OF LOSS IS THAT THE SAME SHOULD BE FILED IN ACCORDANCE WITH SECTION 139(3) I.E. WITHIN THE TIME ALLOWED OR DUE DATE MENTIONED IN SECTION 139(1). NOWHERE SECTION 80 PROVIDES THAT OR PROHIBITS THAT , IF REVISED RETURN U/S 139(5) HAS BEEN FILED THEN SAME CANNOT BE ALLOWED TO BE CARRIED FORWARD OR SET OFF U NDER S ECTION 139, THE RETURN CAN BE FILED EITHER ON THE DUE DATE AS PRESCRIBED UNDER SUB - SECTION (1) OR BELATED RETURN UNDER SUB - SECTION (4). SINCE ONLY THE RETURN FILED WITHIN DUE DATE U/S 139(1) CAN BE REVISED U/S 139(5), THEN THE RETURN FILED U/S 139(5) HAS TO BE RECKONED AS IF THE RETURN HAS BEEN FILED WITHIN THE DUE DATE FILED U/S 139(1) AS IT REPLACES THE SAID RETURN. THE SECTION 139(3) ONLY PROVIDES FOR CARRIED FORWARD AND SET OFF OF LOSSES IF THE RETURN HAS BEEN FILED WITHIN THE DUE DATE AND NOT FOR BELATED RETURN WHICH IS IN TERMS OF SECTION 139(4) . ACCORDINGLY, WE HOL D THAT IN TERMS OF PROVISIONS CONTAINED IN SECTION 139(5) R.W.S. 80, REVISED RETURN FILED BY THE ASSESSEE SHOWING LOSS OF RS. 18 ,18 ,015/ - WHICH HAS BEEN DULY ACCEPTED AND ASSESSED BY THE AO SHOULD BE ALLOWED TO BE CARRIED FORWARD AND SET OFF. THIS PROPOSITION IS SQUARELY COVERED BY THE RATIO LAID DOWN BY HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS PERIYAR DISTRICT CO - OPERATIVE MIL K PRODUCERS UNION LTD ( SUPRA ) WHER E IN , THEIR LORDSHIP OBSERVED AND HELD AS UNDER: A BARE PERUSAL OF THE AFORESAID TWO PROVISIONS, MORE PARTICULARLY THE PROVISION CONTAINED IN SECTION 139(3), MAKES IT CLEAR THAT A RETURN OF LOSS FILED UNDER SECTION 139(3) MAY BE FILED WITHIN THE TIME ALLOWED UNDER SECTION 139(1). ONCE SUCH A RETURN IS FILED, ALL THE PROVISIONS OF THE INCOME - TAX ACT SHALL APPLY AS IF SUCH RETURN HAS BEEN FILED UNDER SECTION 139(1). THIS POSITION IS CLEAR FROM THE EXPRESSION '. . . ALL THE PR OVISIONS OF THIS ACT SHALL APPLY AS IF IT WERE A RETURN UNDER SUB - SECTION (1).' IN OTHER WORDS, A RETURN FILED UNDER SECTION 139(3) IS DEEMED TO BE A RETURN FILED UNDER SECTION 139(1). THE PROVI SION CONTAINED IN SECTION 139(3) MAKES IT CLEAR THAT ALL THE P ROVISIONS OF THIS ACT SHALL APPLY TO SUCH A RETURN AS IF IT WERE A RETURN UNDER SECTION 139(1). IN VIEW OF SUCH A SPECIFIC PROVISION, THERE IS NO REASON TO EXCLUDE THE APPLI CABILITY OF SECTION 139(5) TO A RETURN FILED UNDER SECTION 139(3). SAVITRI ENTERPRISES ITA NO. 50 74 /MUM/20 06 6 LEARNED COUNSE L APPEARING FOR THE APPELLANT HAS FURTHER SUBMITTED THAT SECTION 80 OF THE INCOME - TAX ACT, WHICH CONTAINS THE PROVISION RELATING TO CARRY FORWARD OF LOSS, DOES NOT CONTEMPLATE THAT A REVISED RETURN CAN BE FILED, AND THEREFORE, THE LOSS AS INDICATED IN THE ORIGINAL RETURN ALONE CAN BE TAKEN INTO ACCOUNT. WE DO NOT CONSIDER SUCH A CONTENTION TO BE TENABLE. IN THE FACE OF THE SPECIFIC PROVISION CONTAINED IN SECTION 139(3) LAYING DOWN THAT ALL THE PROVISIONS CONTAINED IN THE ACT SHALL APPLY TO A RETURN UNDER S ECTION 139(1), THERE WAS NO FURTHER NECESSITY IN SECTION 80 TO REFER SO SUCH PROVISIONS. ON THE OTHER HAND, THERE IS NO SPECIFIC PROVISION CONTAINED EITHER IN SECTION 80 OR IN SECTION 139 EXCLUDING THE APPLICABILITY OF SECTION 139(5) TO A RETURN FILED UNDE R SECTION 139(3) OF THE INCOME - TAX ACT. . ' THUS, IN VIEW OF OUR AFORESAID OBSERVATION AND RESPECTFULLY FOLLOWING THE RATIO OF MADRAS HIGH COURT DECISION , WE HOLD THAT THE ASSESSEE IS ALLOWED TO CARRY FORWARD AND SET OFF OF LOSS FILED IN THE REVISED RETURN AND ACCORDINGLY, ORDER OF THE CIT(A) IS SET ASIDE. 9. IN THE RE SULT , GROUND RAISED BY THE ASSESSE E ARE ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JU LY , 2015. SD/ - SD/ - ( . . ) ( ) ( B R BASKARAN ) ( AMIT SHUKLA ) ACCOUN TANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 8 TH JUNE , 2015 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 32 , MUMBAI. 4 ) THE CIT 20, MUMBAI. 5 ) , , / THE D.R. E BENCH, MUMBAI. 6 ) \ SAVITRI ENTERPRISES ITA NO. 50 74 /MUM/20 06 7 COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, S R.PS