Set-off & carry forward
This query is : Resolved
11 March 2014
Sir,
If I have not filed my current year IT Return within due date then can i carry forward brought forward losses?
If I have not filed my current year IT Return within due date then can i carry forward brought forward losses?
11 March 2014
no it is not allowd in this case.
11 March 2014
Sir, I have asked some of my friends and senior colleagues about the above question, but everyone has answered in affirmative. Please reconsider your answer and reply with reference to some case laws.
Thank You
Thank You
12 March 2014
refer sec 80 if return is not filed on or before due date then in first year of loss cannot be allowed to be set off nor allowed to be carried forward u may always take another opinion of expert.
12 March 2014
I am not asking about current year losses, I am asking about brought forward losses. And in case of current year losses if return is not filed within due date then set-off is allowed in the same year but carry forward is not allowed ( I am sure about this point . One more thing, Sec 80 is of Deductions!!
25 July 2025
You're asking an excellent and nuanced question — and you're right to seek clarity here. Let's settle this properly with **law + logic + case law**.
---
## ✅ **Your Main Question:**
> If an assessee **has brought forward losses** from earlier years, but **fails to file the current year’s return within due date**, can those **brought forward losses still be set off** in the current year?
---
## ✅ **Short Answer:**
> ✅ **Yes**, **brought forward losses can still be set off**, **even if the current year return is filed late**, **provided** those losses were **validly carried forward from earlier years** (i.e., claimed on time in those years).
---
## ⚖️ Legal Reasoning:
### 📘 **Section 139(3)** and **Section 80** of the Income Tax Act:
* These sections impose a condition that **losses (under business or capital gains)** **must be claimed by filing the return on or before the due date** **in the year of loss**, **to be carried forward**.
* But **there is no such condition** for **setting off** **brought forward losses** **in a future year**, even if the return in that future year is filed late.
> 🔁 Think of it this way:
>
> * **Claiming the loss (first time)** = Must file on time.
> * **Using the loss (later years)** = No requirement of on-time filing.
---
## ✅ Supported by Judicial Precedents:
### 🔹 **CIT v. Kishore V. Patel** \[(1999) 236 ITR 315 (Mad)]
Held:
> *If the return in the year in which the loss was first incurred was filed in time, then even if the return in the subsequent year is filed late, the assessee can still set off the brought forward losses.*
### 🔹 **DCIT v. Vardhman Spinning** \[(2008) 21 SOT 476 (Chd.)]
Held:
> *There is no provision in the Act that prohibits the set-off of brought forward losses in case of belated return, as long as losses were validly carried forward.*
---
## ❌ BUT — For clarity:
| **Loss Type** | **Return filed late in year of loss?** | **Effect** |
| ---------------------------------- | -------------------------------------- | ----------------------------------- |
| Business loss | Yes | ❌ Cannot carry forward |
| Capital loss | Yes | ❌ Cannot carry forward |
| Unabsorbed depreciation | Yes | ✅ Can carry forward (no time limit) |
| ✅ Return on time, now filing late? | Brought forward loss | ✅ Can set off in late return |
---
## 🧾 Conclusion:
| **Question** | **Answer** |
| --------------------------------------------------------------------------- | ----------------------------------------- |
| Can you carry forward current year business/capital loss if return is late? | ❌ No |
| Can you set off brought forward loss in a year even if return is late? | ✅ Yes |
| Is Section 80 related to deductions only? | ❌ No — it also governs loss carry forward |
> 🔎 **Note:** Section 80 says:
> *"No loss which has not been determined in pursuance of a return filed in accordance with the provisions of section 139(3) shall be carried forward..."*
> — This applies to the **year of incurring the loss**, **not the year of set-off**.
---
## ✅ Final Tip:
Make sure the **losses were validly determined and carried forward** in an ITR filed on time in the past. If yes, you're fully within your right to claim the set-off — even in a belated return.
---
Let me know if you'd like a sample computation sheet or AO clarification note.
---
## ✅ **Your Main Question:**
> If an assessee **has brought forward losses** from earlier years, but **fails to file the current year’s return within due date**, can those **brought forward losses still be set off** in the current year?
---
## ✅ **Short Answer:**
> ✅ **Yes**, **brought forward losses can still be set off**, **even if the current year return is filed late**, **provided** those losses were **validly carried forward from earlier years** (i.e., claimed on time in those years).
---
## ⚖️ Legal Reasoning:
### 📘 **Section 139(3)** and **Section 80** of the Income Tax Act:
* These sections impose a condition that **losses (under business or capital gains)** **must be claimed by filing the return on or before the due date** **in the year of loss**, **to be carried forward**.
* But **there is no such condition** for **setting off** **brought forward losses** **in a future year**, even if the return in that future year is filed late.
> 🔁 Think of it this way:
>
> * **Claiming the loss (first time)** = Must file on time.
> * **Using the loss (later years)** = No requirement of on-time filing.
---
## ✅ Supported by Judicial Precedents:
### 🔹 **CIT v. Kishore V. Patel** \[(1999) 236 ITR 315 (Mad)]
Held:
> *If the return in the year in which the loss was first incurred was filed in time, then even if the return in the subsequent year is filed late, the assessee can still set off the brought forward losses.*
### 🔹 **DCIT v. Vardhman Spinning** \[(2008) 21 SOT 476 (Chd.)]
Held:
> *There is no provision in the Act that prohibits the set-off of brought forward losses in case of belated return, as long as losses were validly carried forward.*
---
## ❌ BUT — For clarity:
| **Loss Type** | **Return filed late in year of loss?** | **Effect** |
| ---------------------------------- | -------------------------------------- | ----------------------------------- |
| Business loss | Yes | ❌ Cannot carry forward |
| Capital loss | Yes | ❌ Cannot carry forward |
| Unabsorbed depreciation | Yes | ✅ Can carry forward (no time limit) |
| ✅ Return on time, now filing late? | Brought forward loss | ✅ Can set off in late return |
---
## 🧾 Conclusion:
| **Question** | **Answer** |
| --------------------------------------------------------------------------- | ----------------------------------------- |
| Can you carry forward current year business/capital loss if return is late? | ❌ No |
| Can you set off brought forward loss in a year even if return is late? | ✅ Yes |
| Is Section 80 related to deductions only? | ❌ No — it also governs loss carry forward |
> 🔎 **Note:** Section 80 says:
> *"No loss which has not been determined in pursuance of a return filed in accordance with the provisions of section 139(3) shall be carried forward..."*
> — This applies to the **year of incurring the loss**, **not the year of set-off**.
---
## ✅ Final Tip:
Make sure the **losses were validly determined and carried forward** in an ITR filed on time in the past. If yes, you're fully within your right to claim the set-off — even in a belated return.
---
Let me know if you'd like a sample computation sheet or AO clarification note.
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