Commissioner of Income Tax vs Rajesh Kumar, National Spices

C.N. Ramachandran Nair, J.—This reference is at the instance of the Revenue. The following questions are referred to us for our decision :

"1. Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the question as to whether a loss can be set off can arise only in the assessment of the succeeding year or years when there is a positive income against which such set off is claimed ?

Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in vacating the directions of the Assessing Officer recorded in the assessment order to the effect that the loss shall not be carried forward?"

We heard standing counsel for the Department, but none appeared for the assessee even though notice was served on the assessee. Standing counsel brought to our notice a decision in Commissioner of Income Tax Vs. Smt. Gunavathy Dharmasy, which is rendered by this court reversing the order of the Tribunal in I.T.A. No. 198/Coch. of 1989 in the case of another partner of the very same firm of which the assessee is also a partner. The Tribunal has relied on the said earlier order of the Tribunal and allowed the assessee''s appeal. Since the order relied on by the Tribunal is reversed by this court in the decision above referred to, the very basis of the order goes and the finding of the Tribunal has to be reversed. Accordingly, we have to answer the question against the assessee and in favour of the Revenue. We also notice the clear-cut finding by the authorities below that the assessee could not file the return for the year 1995-96 within the time provided u/s 139(1) or Section 139(3) and so much so, the assessee is not entitled to carry forward the loss by virtue of the provision contained in Section 80 of the Income Tax Act. The further contention of the assessee raised before the authorities below is that the question of carry forward of loss can be decided only in the succeeding year when set off was claimed. We cannot agree with this proposition also.

We, therefore, answer the question referred to us against the assessee and in favour of the Revenue.

A copy of this judgment under the seal of the High Court and the signature of the Registrar shall be forwarded to the Income Tax Appellate Tribunal, Cochin Bench, as required by law.