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2002 DIGILAW 673 (KER)

Deputy Commissioner v. Yucos Family Trust

2002-10-09

A.LEKSHMIKUTTY, S.SANKARASUBBAN

body2002
Judgment :- 1. All these T.R.Cs. are filed against the common order passed by the Agricultural Income Tax Appellate Tribunal, Additional Bench, Kozhikode. Government has come in revision. Question for consideration is regarding the interpretation of S.12 of the Agricultural Income Tax Act read with R.13 of the Kerala Agricultural Income Tax Rules. 2. The assessment was originally completed by the. Agricultural Income Tax Officer, Mananthavady by order dated 4th June, 1996 allowing carry forward of the loss sustained in the previous year and setting off the same against the agricultural income derived during the subsequent year. Subsequently, on verification, the Assessing Authority found that as error had been crept in while granting carry forward of the loss sustained in the previous year, since the assessee had not submitted return in time during the previous year and that by virtue of R.13 of the Kerala Agricultural Income Tax Rules, the assessee is not entitled to carry forward of the loss sustained in the previous year. In.that view of the matter, the Assessing Authority passed a revised order, disallowing the cany forward of the loss made by the assessee. The assessee filed an appeal before the Appellate Assistant Commissioner (AITA), Kozhikode, who on his part affirmed the order of assessment and consequently dismissed the appeal. Against that the assessee filed further appeals before the Tribunal. The Tribunal allowed the appeals holding that the assessee is entitled to carry forward of the loss. It is against that these T.R.Cs. are filed. 3. S.12 of the Kerala Agricultural Income Tax Act reads (hereinafter referred to as 'the Act') as follows" "Where any person sustains a loss as a result of computation of agricultural income in any year, the loss shall be carried forward to the following year and set off against the agricultural income of that year and if it cannot be wholly set off, the amount of loss not so set off, shall be carried forward to the following year and so on, but no loss shall be carried forward for more than eight years". Thus a reading of S.3 2 of the Act will show that the only limitation is that loss can be earned forward only for eight years. There is no other condition attached. Thus a reading of S.3 2 of the Act will show that the only limitation is that loss can be earned forward only for eight years. There is no other condition attached. R.13 of the Kerala Agricultural Income Tax Rules is as follows: "Carry forward of loss in accordance with S.12 is admissible in any year when return is filed for all the years on the due date or within such time as may be allowed by the Agricultural Income Tax Officer along with audited statement of accounts and a statement in Form 17." 4. Learned Government Pleader submitted that S.12 of the Agricultural Income Tax Act has to be interpreted in the light of R.13 of the Agricultural Income Tax Rules and if that be so, the returns are not filed in time and the assessee is not entitled to the benefit to carry forward the loss. On the other hand, learned counsel for the assessee submitted that the section allows carry forward and if it cannot be wholly set off, the amount of loss not so set off, shall be carried forward for more than eight years. 5. S.98 of the Act deals with framing of Rules. When the section has not imposed any condition regarding the filing of the returns, that cannot be introduced by the Rules. A similar case arose under the Indian Income Tax Act in the decision reported in Commissioner of Income Tax, Punjab v. Kulu Valley Transport Co. P. Ltd. (77 ITR 518). The question there was regarding the interpretation of S.24(2) of the Income Tax Act. There is a substantive provision relating to carry forward. Dealing with this question, the Supreme Court held as follows: "S. 24(2) confers the benefit of losses being set off and carried forward and there is no provision in S.22 under which losses have to be determined for the purpose of S.24(2). S.22(2A) simply says that in order to get the benefit of S.24(2) the assessee must submit his loss return within the time specified by S.22(1). That provision must be read with S.22(3) for the purpose of deter mining the time within which a return has to be submitted. It can well be said that S.22(3) is merely a proviso to S.22(1). Thus, a return submitted at any time before assessment is made is a valid return. That provision must be read with S.22(3) for the purpose of deter mining the time within which a return has to be submitted. It can well be said that S.22(3) is merely a proviso to S.22(1). Thus, a return submitted at any time before assessment is made is a valid return. In considering whether a return made is within time sub-s. (1) of S.22 must be read along with sub-s. (3) of that section. A return whether it is a return of income, profits or gains or of loss must be considered as having been made within the time prescribed if it is made within the time specified in S.22(3). In other words if S.22(3) is complied with S.22(1) must also be held to have been complied with. If compliance has been made with the latter provision the requirements of S.22(2A) would stand satisfied." The above decision was followed by in Commissioner of Income Tax v. Kamala Tea and Industries Ltd. (228 ITR 97). The assessee is entitled to carry forward loss, even though it did not file its return of income within the time prescribed under sub-s.(1) of S.139 of the Income Tax Act. There, the Gauhati High Court followed the decision in C.I.T. v. Kulu Valley Transport Co. P. Ltd. (77 ITR 518). 6. In the above view of the matter, we are of the view that the Tribunal is correct in holding that the loss can be carried forward even if the return is not filed in time. T.R.Cs. are dismissed.