By TIOL News Service

AHMEDABAD, JULY 24, 2017: THE ISSUE BEFORE THE COURT IS - Whether once a return was revised u/s 139(5) claiming carry forward of losses within stipulated time, the original return filed u/s 139(1) would not survive. YES is the verdict.

Facts of the case:

The assessee filed its return u/s 139(1) declaring total income of Rs.53,24,330/-. In such return, the assessee did not claim speculation loss of Rs. 69,93,450/-. Such return was, however, revised u/s 139(5). The AO disallowed the carry forward our of the assessee. In particular, the Tribunal was of the view that once a return was revised u/s 139(5), the original return filed u/s 139(1) would not survive. of the speculation loss on the ground that the same was not claimed in the original return but in the revised return. The CIT(A) as well as the Tribunal ruled in fav

On appeal, the HC held that,

++ it is noticed that under sub-section (1) of Section 139, every person whose income for the previous year exceeds the maximum amount not chargeable to tax, is required to file a return before the due date. Sub-section (3) of Section 139 provides that any person who has sustained a loss and claims that the loss should be carried forward would file a return of loss within the time prescribed under sub-section (1) and thereupon all the provisions of the Act shall apply as if it was a return under sub-section (1) of Section 139 of the Act. Under sub-section 4 of Section 139, a person who has not furnished a return within the time allowed under sub-section (1) may still furnish a return at any time before the end of the relevant assessment year or before the completion of the assessment whichever is earlier. Sub-section (5) of Section 139 provides that any person having furnished a return under sub-section (1) or sub-section (4) discovers any omission or a wrong statement therein, he may furnish a revised return any time before the expiry of one year from the end of relevant assessment year or before the completion of the assessment whichever is earlier;

++ sub-section (5) of Section 139, therefore, gives right to an assessee who has furnished a return under sub-section (1) or sub-section (4) to revise such return on discovery of any omission or a wrong statement. Such revised return, however, can be filed before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier. This is precisely what the assessee did while exercising the right to revise the return. Sub-section (5) of Section 139 does not envisage a situation whereupon revising the return if a case for loss arises which the assessee wishes to carry forward, the same would be impermissible. In terms, sub-section (5) of Section 139 allows the assessee to revise the return filed under subsection (1) or sub-section (4) as long as the time frame provided therein is adhered to and the requirement of the revised return has arisen on discovery of any omission or a wrong statement in the return originally filed.

(See 2017-TIOL-1373-HC-AHM-IT)