1971 PLP 444 (PTD)

VEERASWAMI, J.‑The question in this petition relates to the propriety of the rejection of the return filed by the petitioner before the first respondent as out of time under section 22(2-A) of the Income‑tax Act, 1922. The petitioner, which is a private limited company, filed a return on April 1, 1961, for the assess ment year 1960‑61, the corresponding accounting year having ended on March 31, 1960, in which it showed a loss of Rs. 22,562 under the head of "business". This did not include unabsorbed depreciation and development rebate for the year. The petitioner showed in the return the figure of unabsorbed depreciation. But it is not clear whether it also included in it development rebate. But that is a matter for factual determination by the revenue. We are only concerned with the correct principle that should be applied to a return of this kind. This Court in Commissioner of Income‑tax v. Speed‑A‑Way (P.) Ltd. ((1967) 65 I T R 351), the judgment in which is reported as an Appendix to Sri Hari Mills Ltd. v. First Income‑tax Officer ((1967) 65 I T R 348), held that carrying‑forward an unabsorbed depreciation did not fall under section 24(2) and did not, therefore, depend upon compliance with section 22(2‑A). The view also was expressed that the return in that case fell squarely within section 22(3). Sri Hari Mills Ltd. v. First Income‑tax Officer reiterated the principle and pointed out that unabsorbed development rebate also like unabsorbed depreciation would not fall within the ambit of section 22(2‑A). If, therefore, the return filed by the petitioner covered unabsorbed depreciation and development rebate, which would fall under section 10(2), it will be clear that the return would be one within section 22(2) and could not be ignored as out of time, but would have to he disposed of on its merits. But as the return also included the carry over of business loss for the year, it would also fall within the ambit of section 22(2‑A). The revenue was of the view that, when the return was out of time under section 22(2‑A), it should not be taken into account for purposes of unabsorbed depreciation and development rebate. We are unable to accept this view. Where an assessee claims to carry over business loss and at the same time carry over unabsorbed depreciation and develop ment rebate, they have all to be included in one return, though part of the claim may fall under section 22(2‑A) and the other part under section 22(2). The Act in such a case does not require two separate returns. In our opinion, therefore, the return filed by the petitioner was a composite one and should serve both section 22(2) and section 22(2‑A). If that part of the return which related to the carry over of business loss was filed out of time under section 22(2‑A), it did not ipso facto and ipso jure follow that the return should be rejected in so far as it is under section 22(2). In that case, that part of the return which is out of time will have to be put aside and that part of the return relating to unabsorbed depreciation and development rebate would be a valid one and should be taken into account. Further, all that subsection (2‑A) of section 22 implies is that, if the assessee is to be entitled to the benefit of carry‑forward of loss, then he has to comply with the conditions prescribed in that provision including the time limit. The only effect on the assessee of riot filing a return which falls within that subsection is that he will not be entitled to the benefit of the carry‑forward of the loss, in this case the petitioner's business loss. Sub section (2‑A) has no further effect and it will not affect and the validity of the return in respect of other matters not failing within the purview of that subsection. Viewed in that manner the return filed by the petitioner for the year in question is valid and requires to be considered by the revenue, but only confined to unabsorbed depreciation and development rebate. That again would depend upon the factual examination whether the return covered both or either of them. In fact, Mr. Swaminathan, who appeared for the petitioner, admitted that, as the return was filed out of time so far as sub section (2‑:,N) of section 22 is concerned, his client would not be entitled to the benefit of carry‑forward of the business loss for the year. The petition is allowed in those terms but with no costs.