Timely Return Required

Section 121 — TIMELY-FILING REQUIREMENT FOR LOSS CARRY-FORWARD (1961 s. 80 SUCCESSOR)

Section 121 is the substantive equivalent of 1961 s. 80. It mandates that NO LOSS shall be carried forward and set off under ss. 111(1), 112(1), 113(2), 114(2) etc. UNLESS the loss has been determined IN PURSUANCE OF A RETURN FILED UNDER s. 263(1) — i.e., within the original due-date. Belated returns (post due-date) preserve the right to file but FORFEIT loss-carry-forward. This is the gateway provision for all loss-carry-forward claims.

STATUTORY ARCHITECTURE

Closes Chapter VII (Set-off & Carry Forward). The PROCEDURAL gatekeeper: even if substantive loss-carry-forward is available under ss. 110-115, the assessee must clear the procedural hurdle of TIMELY-FILED RETURN (s. 263(1) due-date — typically 31-Jul / 31-Oct / 30-Nov depending on category). Belated return (s. 263(4) — within end of relevant tax year + 12 months) saves the right to file BUT loses loss-carry-forward eligibility. Revised return (s. 263(5)) — may be used to correct return with loss but only if original was timely.

PLANNING NOTES

(i) For LOSS-YEAR returns, file by original due-date — ALWAYS. Even one-day delay forfeits multi-year loss-shield value. (ii) Revised return permits correction of QUANTUM of loss — but original must be timely-filed. (iii) For carry-forward-loss claims in subsequent years, the timely-filing condition ATTACHES TO THE LOSS-YEAR RETURN, not the set-off year. (iv) Common error: belated return shows correct loss → AO denies carry-forward. Defending position: prove original timely-filing. (v) For revised-and-finalised assessments where loss has been REDUCED in scrutiny, the reduced amount applies in carry-forward — original-return numbers are NOT decisive.

CROSS-REFERENCES

• Section 263 — Return-of-income provisions.
• Sections 110-115 — Substantive carry-forward (gatewayed by this section).