S. MOHAN, J. ( 1 ) THE short question that arises for our consideration in this case is, as to what exactly should be the treatment granted to a belated return, which was filed on 31-7-1987, in the light of Section 139 (3) and (10) of the Indian Income Tax Act (hereinafter referred to as 'the Act' ). Now the Sections may be extracted:"139 (3): If any person who has sustained a loss in any previous year under the head "profits and gains of business or profession" or under the head "capital gains" and claims that the loss or any part thereof should be carried forward under sub-section (1) of Section 72, or sub-section (2) of Section 73, or sub-section (1) or sub-section (3) of Section 74, or sub-section (3) of Section 74-A, he may furnish, within the time allowed under sub-section (1) a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1 ). 139 (10): Notwithstanding anything contained in any other provision of this act, a return of income which shows the total income below the maximum amount which is not chargeable to tax shall be deemed never to have been furnished: provided that nothing hereinbefore contained shall apply to, a) a return furnished in response to a notice under sub-section (2) of Section 148; b) a return of a firm or a partner of a firm; c) a return of loss which has been furnished in accordance with the provisions of sub-section (3); d) a return of a person who has claimed exemption of income from property held for charitable or religious purposes; e) a return furnished under sub-section (4-B) in respect of a political party; and f) a return furnished in support of a claim for refund under Section 237. "we may also say that the amendment to Section 139 (3) came into force with effect from 1-4-1987, while the amendment to Section 139 (10) came to be introduced on 1- 4-1986. As to how such matters should be treated would be evident from Circular no. 469, dated 23-9-1986, which is extracted below:- "extract of Circular No. 469, dated 23-9-1986, ITR ST 21, 33. As to how such matters should be treated would be evident from Circular no. 469, dated 23-9-1986, which is extracted below:- "extract of Circular No. 469, dated 23-9-1986, ITR ST 21, 33. (vi) Providing the dale by which a return showing loss is to be furnished and treatment of returns below taxable limit. 9. 1. Under the existing provisions of Section 139 (3) of the Income Tax Act, as amended by the Taxation Laws (Amendment) Act, 1970, the Income Tax officer on an application made to him for this purpose is empowered to extend, in his discretion, the time for furnishing a return of loss. By the Amending Act, this power of the Income Tax Officer has been withdrawn. Accordingly, as per the amended provision, if the assessec is to get the benefit of the determination of the loss or any part thereof and for its carry forward under Section 72 (1) or section 73 (2) or Section 74 (1) or Section 74-A (3) of the Income Tax Act, he should file the rclurn voluntarily wilhin the period specified in Section 139 (1) or by the 31st day of July of the assessment year relevant to the previous year during which the loss was sustained. Further, as per clause (d) of the proviso to the newly inserted sub-section (1) to Section 139 of the Income Tax Act, which overrides anything contained in any other provision of the Income Tax Act, a return of loss which has been furnished after the Thirty-first day of July of the assessment year during which the loss was sustained, shall be deemed never to have been furnished. 9. 2. The above amendment shall come into force with effect from 1st April, 1987, and will, accordingly, apply to the assessment year 1987-88 and subsequent years. 9. 3. Section 139 (1) of the Income Tax Act provides that every person, if his total income or the total income of any other person in respect of which he is assessable during the previous year exceeded to maximum amount which is not chargeable to income-tax, shall furnish a return of his income or the income of such other person in the prescribed form and verified in the prescribed manner. This return has to be furnished within the specified period. This return has to be furnished within the specified period. It was held by the supreme Court in the ease of CIT v Ranchhoddas Karsondas, 36 ITR 569, that a return disclosing income below taxable limit submitted voluntarily under section 22 (1) of the Indian' Income Tax Act, 1922 (corresponding to Section 139 (1) of the Income Tax Act, 1961), is a good return and such a return voluntarily made before the assessment cannot be ignored by the Income Tax officer. This decision has been superseded by the Amending Act by inserting sub-section (9) of Section 139. The new sub-section (10) provides that notwithstanding anything contained in any other provision of this Act, a return of income which shows the total income below the maximum amount which is not chargeable to tax shall be deemed never to have been furnished. As per the proviso to this sub-section, a return of income below taxable limit shall not be treated as non-est in the following circumstances: (a) a return furnished in response to a notice under Section 148 (2); (b) a return of a partner of a firm; (c) a return of a person who has claimed exemption of income from property held for charitable or religious purposes; (d) a return of loss which has been furnished before the 31st day of July of the assessment year relevant to the previous year during which the loss was sustained; (e) a return furnished under sub-section (4-B) in respect of a political party; (f) a return furnished in support of a claim for refund under Section 237. 9. 4. These amendments shall come into force with effect from 1st April, 1986, and will be applicable to the assessment year 1986-87 and subsequent years. 9. 5. It may be clarified that the assessments already completed before the enactment of the Amending Act will not be rectified. Further, keeping in view, the fact that the new sub-section (3) comes into force with effect from 1st April, 1987, a return of loss filed for the assessment year 1986-87 or earlier years within the prescribed period as per the existing provisions will not be denied the benefit of the carry forward of loss. (Section 12 of the Amendment Act)" ( 2 ) ACCORDING to Mr. (Section 12 of the Amendment Act)" ( 2 ) ACCORDING to Mr. K. R. Prasad, learned counsel for the appellant, the learned Judge did not have regard while considering the prayer of the appellant to Section 139 (10) of the Act. If only he had the regard for that section read with the circular referred to above, it would not have resulted in the order under appeal. Therefore all that he prays at our hands is that without seeking to carry forward loss, the return though belated will have to be considered in the light of the circular. ( 3 ) IN opposition to this Mr. Raghavendra Rao, learned counsel for the respondent, submitted that even as per the circular, Section 139 (10) could be applicable to assessment year 1986-87 only if the return had been filed within the prescribed time, but in so far as the return filed on 31-7-1987 the question of considering the return would not arise. ( 4 ) IN order to appreciate the respective contentions we will now extract the impugned order:-"no. FT 286-DC Office of the deputy Commissioner of income Tax (Assessment), special Range, Hubli. Date: 09-01-1989. Proceedings of the Deputy Commissioner of Income Tax (Assessment), Special range, Hubli 1. Name of assessee : M/s. Sirigcri Kanakappa shelly and Sons, Gangavalhi, dist. Raichur. 2. Assessment year : 1986-87 3. Status : R. F. Order under Section 139 (10) of the I. T. Act for the assessment year 1986-87, the assessee-firm furnished return of loss declaring a loss of Rs. 4,66,690 on 31-7-1987. In other words, the relurn has been filed after a delay of about a year. It is stated by the assessee that provisions of Section 139 (10) applied to the assessment year 1987-88 onwards and that Form No. 6 was filed seeking extension of time to furnish the return of income. Section 139 (10) has been amended with retrospeclive effect from 1-4-1986. Thus, the said section applies to the assessment year 1986-87 also. Further, it is observed from the photostat copy of the acknowledgment slip produced that F. No. 6 was filed at I. T. Officer, raichur on 30-6-1986 seeking extension of lime upto 31-12-1986. However, the return of loss has been filed on 31-7-1987. Thus, the said section applies to the assessment year 1986-87 also. Further, it is observed from the photostat copy of the acknowledgment slip produced that F. No. 6 was filed at I. T. Officer, raichur on 30-6-1986 seeking extension of lime upto 31-12-1986. However, the return of loss has been filed on 31-7-1987. In view of the above, the return of loss for assessment year 1986-87 is to be treated as non-est, i. e. , as never to have been filed. Therefore, for the assessment year 1986-87, the return is treated as never to have been furnished and the same is lodged. Sd/- (T. Jayasankar) deputy Commissioner of income Tax (Assessment), special Range, Hubli. "unfortunately when the correctness of this order was questioned the learned Single judge was of the view that duty to be performed under Section 139 (3) had been performed by the Officer and no interference was called for. The allcntion of the learned Judge has not been drawn to Section 139 (10) and the circular dated 23-9-1986. It is well sellled that circular is binding on the assessing authorities. The extract of the Circular at para 9,5. categorically says "further keeping in view the fact that the new sub-section (3) comes into force with effect from 1 st April, 1987 a return of loss filed for the assessment year 1936-87 or earlier years within the prescribed period as per the existing provisions will not be denied the benefit of the carry forward of loss. " therefore, the requirement to file return within the prescribed period is only for the benefit of carry forward of loss.-In so far as Mr. Prasad, learned counsel for the appellant, does not claim the benefit, we think it is incumbent on the part of the assessing authority to consider the return, though the return came to be filed on 31 -7-1987. Therefore, subject to this direction, we allow the writ appeal, set aside the order of the learned Single Judge and quash the impugned order. The matter will stand remitted to the Deputy Commissioner of Income Tax (Assessment), Special Range, hubli to take into consideration the return dated 31-7-1987 and deal with the same in accordance with law. We make it clear this is not for the consideration of the benefit of carry forward of loss. No costs. --- *** --- .