Summary
The assessee was a private company incorporated under the Indian Companies Act, 1913. In January 1956 the company voluntarily filed returns under s. 22(3) of the Income--tax Act, 1922 showing losses for the assessment years 1953-54 and 1954-55. No notice had been served on the company under s. 22(2) of the Act. The income-tax Officer held that since the returns had been filed after the statutory period the company was not entitled to carry forward the losses for both the years in the subsequent assessments. The Appellate Assistant Commissioner dismissed the company's appeal and its application for condoning the delay in filing the returns in question. The Tribunal held that the company was not entitled to the benefit of carrying forward the losses as it had not filed the returns in accordance with s. 22(2A) of the Act. The High Court, in reference, held that a voluntary return showing loss could be validly filed at any time before assessment was made on the strength of the provision in s. 22(3) of the Act and the assessee was entitled to have such loss carried 'forward under s. 24(2).
The Commissioner of Income-tax appealed to this Court,HELD: Per Hegde and Grover, JJ.-The appeal Must be dismissed.(i) In view of this Court's decision in Ranchhoddas Karsondas's case the income-tax Officer could not have ignored the returns and had to determine the losses shown by the assessee. Section 24(2) confers the benefit of losses being set off and carried forward and there is no provision in s. 22 under which losses have to be determined for the purposes of s. 24(2). Section 22(2A) does not place any limitation on that right. It simply says that in order to get the benefit of s. 24(2) the assessee must submit his loss return within the time specified by s. 22(1). That provision must be read with s. 22(3) for the purpose of determining the time within which a return has to be submitted. It can wellbe said that s. 23(3) is merely a proviso to s. 22(1). Thus a returnsubmitted at any time before the assessment is made is a valid return.In considering whether a return made is within time sub-s. (1) of s. 22must be read along with sub-s. (3) of that section. A return whether it is a return of income, profits or gains or loss must be considered as having been made within the time prescribed if it is made within the time specified in s. 22(3). In other words if s. 22(3) is complied with s. 22(1) also must be held to have been complied with. If compliance has been made with the latter provision the requirements of s. 22(2A) would stand satisfied. [463 F-H. 464 A-B](ii) The argument that a great deal of inconvenience will result of a voluntary return can be entertained at any time in accordance with 453s. 22(3) when loss is involved and in order to give the assesses the benefit of the carry forward of the loss a number of assessments would have to be reopened, could not be accepted. A voluntary return cannot in any case be filed beyond the period specified in s. 34(3) of the Act. It cannot be overlooked that even if two views are possible the view which is favorable to the assessee must be accepted while construing the provisions of a taxing statute.[464 C-D]Commissioner of Income-tax, Bombay City v. Ranchhoddas Karsondas, 36 I.T.R. 569, applied.Radhakrishiba Rtingta & Ors. v. Seventh Income-tax OfficerC-11 Ward, Bombay, 49 I.T.R. 846. approved.Commissioner of Agricultural Income-tax v. Sultan Ali Gharami, 20 I.T.R. 432, Commissioner of Income-tax,- West Bengal v. Govindlal, 33 I.T.R. 630 and Ranchhoddas Karsondas v. Commissioner of Income-tax, Bombay City, 26 I.T.R. 105, referred to.Per Shah, J. (Dissenting) :-The clause "'if he is to be entitled to the benefit of the carry forward of loss"in.sub-s. (2A) of s. 22 clearly means that the right to carry forward loss suffered under the head of income computable under s. 10 may only be exercised if the voluntary return is filedwithin the period specified in sub-s. (1). Sub-Section 3 cannot be readas implying that notwithstanding the restrictions placed by sub-s.(2A)return disclosing loss of income computable under s. 10 will not onlybe entertained but the loss determined and declared under S. 24(3) so as to enable assessee to carry it forward. If a return of loss may be filed at any time in pursuance of a general notice under sub-s. (1), sub-s. (2A) will serve no purpose whatever, The limitation placed upon the right to file return of loss is clearly intended to avoid practical difficulties in the administration of the Act. If the interpretation placed by the High Court be accepted, a tax-payer may avoid making returns pursuant to notice under sub-s. (1) and when sought to be assessed in subsequent years he may claim to bring before. the authorities transactions relating to many previous years which be has not disclosed. [458 G-H; 459 A-C]it was certainly held by this Court in Ranchhoddas Karsondas's case that a return disclosing income below the taxable limit or disclosing such loss cannot be rejected by the Income-tax Officer as not being return of income but that does not mean that the assessee may after filing volun- tary return of loss income under the head "profits and gains of business" after the period specified in s. 22(1) claim that the loss be determined and carried forward. [459 D-E]Case-law referred to.See the full content of this document
Extract
Commissioner Of Income-tax, Punjab VS. Kulu Valley Transport Co. (P) Ltd.
PETITIONER: COMMISSIONER OF INCOME-TAX, PUNJAB Vs.RESPONDENT: KULU VALLEY TRANSPORT CO. (P) LTD.DATE OF JUDGMENT: 30/04/1970BENCH: SHAH, J.C.BENCH: SHAH, J.C.HEGDE, K.S.GROVER, A.N.CITATION: 1970 AIR 1734 1971 SCR (1) 452 1970 SCC (2) 192CITATOR INFO : RF 1975 SC1282 (10)D 1985 SC 114 (8)RF 1988 SC 361 (9)D 1989 SC 501 (16)ACT: Income-tax Act, 1922, ss. 22(1), 22(3) and 22(2A)-Voluntary return showing loss filed after statutory period laid down in s. 22 (1)--Benefit of s. 22(2A) whether can be given to assessee-Whether loss can be carried forward-Return whether can be treated as one under s. 22(3).JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 859 and 860 of 1966.Appeals from the judgment and order dated April 6, 1966 of the Punjab High Court in Income-tax Reference No. 42 of 1962.Jagadish Swarup, Solicitor-General and B. D. Sharma, for the appellant (in both the appeals).B.Sen, S. K. Dholakia, and Vineet Kumar, for the respondent (in both the appeals).12Sup.Cl/70-15 454The Judgment of K. S. HEGDE and A. N. GROVER, JJ. was delivered by GROVER, J.J. C. SHAH, J. gave a dissenting Opinion.Shah, J. The Kulu Valley Transport Co. ?(P) Ltd.hereinafter called 'the Company'--did not file returns of income in respect of the assessment year 1953-54 and 1954-55 within the period specified in the general notice under s. 22(1) of the Income-tax Act, 1922. In January 1956 the Company filed voluntary returns disclosing loss of in...
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