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Income Tax Appellate Tribunal, DELHI “B” BENCH: NEW DELHI
Before: SHRI KUL BHARAT & SHRI ANADEE NATH MISSHRA
ORDER
PER KUL BHARAT, JM :
The present appeal filed by the assessee for the assessment year (“AY”) 2014-15 is directed against the order of Ld. CIT(A)-3, Delhi dated 11.09.2018. The assessee has raised following grounds in this appeal:- 1. “That the order of the Commissioner (Appeals) is contrary to the law and the facts of Appellant's present case insofar as it relates to writing off the business investments made by the Appellant in its ordinary course of business.
2. That the Ld. Commissioner (Appeals) erred on facts and in law in confirming the disallowance made by Ld. Assessing Officer holding the writing off the operational investments of Rs. 53,558,035 by the Appellant as long-term capital loss.
3. That the Ld. Commissioner (Appeals)/AO erred in ignoring the fact and in law that the Appellant was engage in financial services business and investments in shares was the principle operating activity of the Appellant hence such writing off of the investments Page | 1 was revenue in nature duly allowable as business loss under provisions of Income Tax Act, 1961. The appellant craves leave to add to, alter, amend or vary from the above grounds of appeal at or before the time of hearing.”
At the time of hearing, no one attended the proceedings on behalf of the assessee. It is seen from the records that no one has been attended the proceedings since 16.09.2021. Therefore, the appeal is taken up for hearing in the absence of the assessee and is being disposed off on the basis of material available on record. However, a letter dated 17.11.2022 by the Resolution Professional of the assessee company has been filed.
BRIEF FACTS OF THE CASE
Facts giving rise to the present appeal are that in this case, return of income was filed on 28.11.2014 declaring total income of Rs.6,04,76,700/-. The case was selected for scrutiny assessment under CASS. Notice u/s 143(2) of the Income Tax Act, 1961 (“the Act”) was issued on 01.09.2015 and duly served upon the assessee and questionnaire u/s 142(1) of the Act was issued on 18.05.2016, 09.06.2016 & 08.11.2016. In response thereto, Ld. Authorized Representative (“AR”) of the assessee attended the proceedings. Thereafter, the assessment was framed vide order dated 30.11.2016 u/s 143(3) of the Act and the Assessing Officer (“AO”) assessed the income of the assessee at total loss of Rs.69,18,665/-.
Aggrieved against this, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, sustained the addition and dismissed the appeal of the assessee.
Aggrieved against the order of Ld.CIT(A), the assessee preferred appeal before this Tribunal.
It is seen that a letter dated 17.11.2022 by the Resolution Professional of the assessee company, Shri Pardeep Kumar Lakhani has been filed. The relevant contents of the letter are reproduced as under:-
Dear Sir / Madam This is with reference to Notice dated 31.10.2022 intimating the hearing date of 29.11.2022 in the above referred matter. This is to inform you that the Assessee Company - Dion Global Solutions Ltd. is undergoing Corporate Insolvency Resolution Process (CIRP) under Insolvency and Bankruptcy Code, 2016 (IBC), initiated by Hon’ble NCLT, New Delhi Bench vide its Order dated 18.08.2020 (Copy enclosed). It is further informed that pursuant to section 14 of the IBC, the Hon’ble NCLT vide its Order dated 18.08.2020 has also declared moratorium prohibiting the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority. The provisions of Section 14 of the IBC are reproduced hereunder for your reference: Section-14: Moratorium (1) Subject to provisions of subsections (2) and (3), on the insolvency commencement date, the Adjudicating Authority shall by order declare moratorium for prohibiting all of the following, namely:- (a) the institution of suits or continuation of pending suits or proceedings against the corporate debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; (b) transferring, encumbering, alienating or disposing off by the corporate debtor any of its assets or any legal right or beneficial interest therein; (c) any action to foreclose, recover or enforce any security interest created by the corporate debtor in respect of its property including any action under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. (d) the recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor. Hence, no proceedings can be initiated or continued against the Corporate Debtor due to applicability of moratorium during CIRP. In view of the explanation given above, you are requested to drop the proceedings against the assessee company.”
7. Ld. Counsel for the assessee company further submitted that Hon’ble National Company Law Tribunal (“NCLT”) has decided the issue in the case of Company Petition No.IB-2695/ND/2019 in the case of M/s. Mykind Vacations Pvt.Ltd. vs. M/s. Dion Global Solutions Ltd. vide order dated 18.08.2020 . The relevant contents of the order passed by Hon’ble NCLT are reproduced as under:-
“In view of above, we are satisfied that the present application is complete and the Operational Creditor is entitled to claim its dues, establishing the default in payment of the operational debt beyond doubt, and fulfillment of requirements under section 9(5) of the Code. Hence, the present application is admitted.
The Applicant has proposed the name of any Interim Resolution Professional. In view of the same, this Bench appoints Mr. Pradeep Page | 4 Kumar Lakhani, having registration no. IBBI/IPA-001/IP- P00541/2017-2018/10966, email address is pradeep.lakhani 1967@gmail.com, mobile no. 9811115617 as the IRP of the Respondent. The IRP is directed to take all such steps as are required under the statute, more specifically in terms of Sections 15,17,18,20 and 21 of the Code.
We direct the Operational Creditor to deposit a sum of Rs.2 lacs with the Interim Resolution Professional Mr. Pradeep Kumar Lakhani to meet out the expenses to perform the functions assigned to him in accordance with Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Person) Regulations, 2016. The needful shall be done within three days from the date of receipt of this order by the Operational Creditor. The amount however will be subject to adjustment by the Committee of Creditors as accounted for by Interim Resolution Professional and shall be paid back to the Operational Creditor.
As a consequence of the application being admitted in terms of Section 9(5) of IBC, 2016, moratorium as envisaged under the provisions of Section 14(1) shall follow in relation to the Respondent prohibiting the respondent as per proviso (a) to (d) of section 14(1) of the Code. However, during the pendency of the moratorium period, terms of Section 14(2) to 14(3) of the Code shall come into force.
The Registry is directed to communicate a copy of the order to the Operational Creditor, the Corporate Debtor, the Interim Resolution Professional and the Registrar of Companies, NCR, New Delhi at the earliest but not later than seven days from today. The Registrar of Companies shall update their website by updating the status of ‘Corporate Debtor’ and specific mention regarding the admission of this application must be notified.”
Ld. Sr. DR has no objection if the present appeal is dismissed with a liberty to the assessee for making application for restoration of appeal before the Tribunal after final order has been passed in Company Petition No.IB- 2695/ND/2019 in the case of M/s. Mykind Vacations Pvt.Ltd. vs. M/s. Dion Global Solutions Ltd. (supra) vide order dated 18.08.2020 by the Hon’ble National Company Law Tribunal (“NCLT”).
We have heard Ld. Sr. DR and perused the material available on record. Looking to the facts of the case and the decision by the Hon’ble NCLT in the above-mentioned case, we dismiss the appeal of the assessee with a liberty to approach this Tribunal for restoration of appeal after final order is passed by Hon’ble NCLT and if so advised. Thus, Grounds raised by the assessee are dismissed.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open Court on 29th November, 2022.