When to file Loss Return-Section 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 u/s 72(1), or 73(2), or 74(1) or 74(3), 74A(3), he may furnish, within the time allowed u/s 139(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 u/s 139(1).
Section 80 Notwithstanding anything contained in this Chapter (i.e. Chapter VI relating to carry forward of loss), no loss which has not been determined in pursuance of a return filed in accordance with the provisions of section 139(3), shall be carried forward and set off u/s 72(1) or 73(2) or 73A(2) 74(1) or 74(3), 74A(3).
- Hence, for carried forward and set off of loss, return is to be filed within the due date mentioned in section 139(1).
- But the loss can be set off during the year even if return is filed belated.
- Both sections i.e. section 139(3) and section 80 does not restrict the carry forward and set off of loss from House Property under section 71B. Hence loss under House Property can be carried forward and set off even if return is filed belated.
- Loss of business specified u/s 35AD can be carried forward even if return is filed after due date as reference to section 73A is neither in section 139(3) nor in section 80. Now, after amendment by the F.A. 2016, w.e.f. AY 2016-17, loss of business specified u/s 35AD can be carried forward and set off u/s 73A(2) only if return is filed within due date.
- There is no time-limit provided under section 32(2) for carry forward of unabsorbed depreciation to any subsequent year. Section 80 also does not give any reference to unabsorbed depreciation. Therefore, unabsorbed depreciation can be carried forward indefinitely.
- Carried forward loss of earlier years, which return had been filed within due date, can be carried forward even if return of current year is filed after due date.
Unabsorbed deprecition can be carried forward even if ITR is filed belated
While loss would be available for carry forward and set off only if it is determined in pursuance of a return filed within time permitted u/s 139(3), but such a condition is not applicable for depreciation, so that it is not required to be determined in the relevant year.CIT v Haryana Hotels Ltd. (2005) 276 ITR 521 (P & H).
The Madras HC in Shri Hari Mills Ltd. v First ITO (1967) 65 ITR 348 held that the requirement of a loss return within time does not have application for depreciation loss.
This view was reiterated in Brahmavar Chemicals (P.) Ltd. v CIT (1999) 239 ITR 867 (Kar.). The reasoning was that though the other sections are mentioned in Section 80, Section 32 is conspicuous by its absence.