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Carry forward of loss

dharmik vadgama (Article) (145 Points)

03 April 2015

can loss be carried forward if return filled 139(1) without loss

subsiquently filled revised return with loss

can such loss be carry forward

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11 Replies

Shishir Nayak ((Expert)) (369 Points)
Replied 03 April 2015

Section 157 of the Income Tax (IT) Act, 1961, states that there are two conditions to be satisfied before loss is allowed to be carried forward. First, the return of loss must be submitted on or before the due date. Second, the loss has been determined by the assessing officer (AO) The AO needs to notify the assessee by an order in writing the amount computed by him which the assessee is entitled to carry forward.

According to Section 80 of the IT Act, carryforward is allowed only when such loss has been determined in pursuance of return of loss submitted by the assessee on or before due date for filing return prescribed under Section 139(1) of the IT Act.

However, loss under, ‘Income from house property,' ‘Unabsorbed depreciation', ‘Capital expenditure on scientific research', and ‘Family planning expenditure' can be carried forward even if the return is not filed within the due date mentioned under Section 139(1).

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Vivek Venkataram (Just cleared CS(441/800) now C.A Final A) (772 Points)
Replied 03 April 2015

Agree with Mr shishir. Very clear explanation.

CA HAYEDAR SHAIKH (Practice ) (627 Points)
Replied 03 April 2015

Agreed with nayak.

katik aggarwal (doing practice) (35 Points)
Replied 04 April 2015

If the original return is filed within the time prescribed u/s 139(1) and later on a revised return is filed u/s 139(5) then as per Dhampur auger mills limited case law the revised return steps into the shoes of the original return and is deemed to have been filed on the date of the original return. Now a return for loss is filed u/s 139(3) according to which the return must be filed within the time prescribed in section 139(1). So, applying section 139(5) here with Dhampur sugar mills limited, the return for loss shall be deemed to be filed on the date of original return. This in turn satisfies 139(3) condition. Because of which it can be said that the loss shall be allowed to be carried forward.

katik aggarwal (doing practice) (35 Points)
Replied 04 April 2015

Adding to what Mr. Shishir Nayak is saying. Section 139(3) should be read with Section 80. Section 139(3) talks only about losses u/h PGBP and Capital gains. It does not talk about Unabsorbed depreciation and losses u/h house property. Also section 80 overrides just section 72, 73, 74, 74A. It does not overrides sections governing c/f and set off of unabsorbed depreciation, losses under head house property losses of business specified u/s 35AD. Hence they can be carried forward even when late return is filed. Infact, a case law says unabsorbed depreciation can be carried forward even when no return is filed at all. Its sort of crazy but that's how it is.