Punjab & Haryana H.C : Whether the Tribunal was right in law in holding that unabsorbed losses could not be claimed by the assessee during the year under appeal as they had not been claimed during the earlier years by the assessee and they had not carried forward to the year under appeal by the ITO ?

Counsel Appeared

Bindia with Miss. Renu Bala, for the Applicant : Ashok Bhan with Ajay Mittal, for the Respondents

S. SODHI, J.:

The matter here pertains to the assessee’s claim for set off during the asst. yr. 1976-77 of Rs. 18,435 on account of unabsorbed loss suffered by it during the asst. yr. 1971-72. This claim was rejected both by the AAC as also by the Tribunal on the ground that the assessee had not claimed this unabsorbed loss for several years and the time limit for it had also expired. This is what had led to the following questions being referred to this Court for its decision :

“(1) Whether the Tribunal was right in law in holding that unabsorbed losses could not be claimed by the assessee during the year under appeal as they had not been claimed during the earlier years by the assessee and they had not carried forward to the year under appeal by the ITO ?

(2) Whether the Tribunal is right in holding that time limit has also expired ?”

The answer to the first question is provided by the judgment of the High Court of Madras in Tyresoles (India) Ltd. vs. CIT (1963) 49 ITR 515 (Mad) : TC45R.238, where it was held that where losses sustained are not set off against the profits of the immediately succeeding year or years, they cannot be set off against profits at a later date. The assessee thus not having sought to set off the unabsorbed loss in the succeeding assessment years after 1971-72 could not seek to claim it later, subsequently in the year 1976-77.

Question No. (1) has thus to be answered in the affirmative, in favour of the Revenue and against the assessee.

As regards the time limit, the Tribunal clearly fell into an error in agreeing with the AAC who had taken it to be four years. The law is, in fact, well settled that the time limit for this purpose is really eight years.

Question No. (2) has thus to be answered in the negative and in favour of the assessee and against the Revenue.

The reference is answered accordingly. There will, however, be no order as to costs.

[Citation : 179 ITR 137]