Income tax query

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Mritul (Querist)
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12 October 2011 Suppose an assessee engaged in a business specified under section 35AD incurs loss. However, he fails to file return within the time allowed under section 139(3). Will the assessee be allowed to carry forward and set off this loss?

Mritul

Mritul (Querist)
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12 October 2011 Please note that section 80 does not refer to section 73A.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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31 July 2024 Under the Indian Income Tax Act, the ability to carry forward and set off losses is governed by specific provisions, and timely filing of the return of income is a crucial requirement for availing these benefits.

### Section 35AD and Loss Carry Forward

**Section 35AD** provides for a deduction in respect of capital expenditure incurred in specified businesses. The losses arising from such specified businesses are treated separately under **Section 73A**.

### Timely Filing of Return

**Section 139(3)** mandates that for the losses to be carried forward, the return of income must be filed within the due date specified under **Section 139(1)**. This is further supported by **Section 80**, which specifies that no loss which has not been determined in pursuance of a return filed within the time allowed under Section 139(1) shall be carried forward and set off under Sections 72(1), 73(2), 73A(2), 74(1), or 74A(3).

### Implication of Section 73A

Section 73A deals with the carry forward and set off of losses from specified businesses as defined under Section 35AD. While Section 80 specifies certain sections for which the loss determination and carry forward rules apply, it does not explicitly mention Section 73A. However, the general principle of timely filing as per Section 139(3) applies to all provisions regarding the carry forward of losses.

### Conclusion

Given that the timely filing requirement under Section 139(3) is a general condition for the carry forward of losses:

- **If an assessee fails to file the return of income within the due date specified under Section 139(1), the losses from the specified business under Section 35AD (governed by Section 73A) cannot be carried forward.**

**Therefore, the assessee would not be allowed to carry forward and set off the loss if the return is not filed within the prescribed time.**

### Practical Steps for Compliance

1. **Timely Filing**: Ensure the return of income is filed within the due date to avail the benefit of carrying forward losses.
2. **Professional Assistance**: Consider seeking assistance from a tax professional to ensure compliance with all procedural requirements.

It's crucial to adhere to the filing deadlines to utilize the benefits provided under the Income Tax Act effectively.

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