Filing Income Tax Return in Case of Loss Section 139(3)

Date- 15 Oct., 2015

If any person who has sustained a loss in any previous year under the head
1. "Profits and gains of business or profession" or
2. under the head "Capital gains" and

claims that the loss or any part thereof should be carried forward , he may furnish, within the time allowed , 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).

Is it mandatory to file loss return under Section 139(3) ?

Rules and provisions related to filing of income tax returns in case of Loss [Loss return] are governed by Section 139(3) of the Income Tax Act 1961. As per these provisions it has been stated that in case a taxpayer has incurred a loss in the previous year, it is not mandatory for him to file an income tax return for the same.Section 157 of the Income Tax (IT) Act, 1961, states that there are two conditions to be satisfied before loss is allowed to be carried forward. First, the return of loss must be submitted on or before the due date. Second, the loss has been determined by the assessing officer (AO) The AO needs to notify the assessee by an order in writing the amount computed by him which the assessee is entitled to carry forward.

In what cases Return Of Loss Should Be Filed as per Section 139(3) :

When an assessee who has suffered a loss in a previous year under the heads :
1.Capital gains and / or
2.Profits and gains of business or profession
And if he wants that the loss or any part thereof should be carried forward for the next assessment years then , he “may” furnish a return of loss within the time allowed , in the prescribed form. That return should be in accordance with all the provisions related to it.
?If the assessee wants to claim this loss in future years against income of the succeeding years then The Income Tax Return showing the loss should be filed on or before the due date if this loss is to be carried forward to the next year and set-off against future income. But this is only in respect of loss occurred under the above stated heads.

In case of loss occurred is under the head House property income :

If loss occurred under head income from House Property then it will be allowed to be carried forward even though the income tax return is filed after the due date of filing of return.

When the assessee has not submitted loss return in the first time and he submits a return of loss in response to a notice under Section 142(1), such loss cannot be carried forward unless it is a loss under head income from house property.

For setting off the loss arises under one head against income under another head it is not required to file a return of loss under this head.