Carry forward of loss

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).

Agree with Mr shishir. Very clear explanation.

Agreed with nayak.

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.

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.

Good explanation with decided case,

Exactly ...all experts have clarified the above query

Very prompt reply by all the experts.

Dear friends, I am not the member of the expert panel. Please guide me on how to become that.

Hello Katik,

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Hello Mr. Kartik, Can you please quote the citation of Dhampur Sugar Mills Ltd? That will be a great help to me.