Section 139(3) of the income tax act covers the provisions of filing ITR in case of loss. As per this section; in case the assessee has incurred a loss in the PY, he need not file an ITR for the same. However, this does not apply to the firms and companies, since; they need to file an ITR mandatorily, even in the case of loss.
Section 139(3)-Filing ITR in Case of Loss
As per this section, if any person who has sustained a loss in any previous year under the head “Profits & gains of business or profession” or under the head “Capital gains” and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, [or sub-section (2) of section 73A] or sub-section (1) or sub-section (3) of section 74, or sub-section (3) of section 74A, he may furnish, within the time allowed under sub-section (1) of section 139, a return of loss in the prescribed form & verified in the prescribed manner and containing such other particulars as may be specified, and all the provisions of this Act shall apply as if it were a return under sub-section (1) of section 139.
Provisions of section 139(3)
If there is a loss incurred under the head ‘Capital Gains’ or ‘Profits & Gains of Business and Profession,’ filing of return is mandatory, if an assessee wants to carry forward the loss to the next year and set-off against future income. An assessee shall file the ITR on or before the due date if he needs to carry forward the loss.
In case, the assessee wants to set-off the loss against some other income arising in the same year; he can set-off, even if he files the return after the due date of filing of returns.
In case of the loss arising under the head ‘House Property’, the assessee can carry forward the loss; even if he files the ITR after the due date of filing of returns.
If the taxpayer has submitted a return of loss in response to a notice U/S 142(1); he cannot carry forward such loss unless it is a loss under the head ‘Income from House Property’. However, he can still carry forward the unabsorbed depreciation.
An assessee cannot carry forward the loss of the current year unless he submits the return of loss before the due date. However, he can carry forward the loss of earlier years if, he had submitted the return of loss of that year’s within the due date & such loss has been assessed.