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Income Tax Appellate Tribunal, DELHI BENCH ‘B’: NEW DELHI
PER BENCH
(A) These three appeals by Assessee and Revenue are filed
against the order of Learned Commissioner of Income Tax
(Appeals)-34 & 03, New Delhi [Ld. CIT(A)”, for short], dated
19/08/2019, 07/05/2019 for Assessment Years 2010-11& 2015-
16 respectively. Grounds taken in these appeals are as under:
ITA No.8346/Del/2019 (ASSESSMENT YEAR 2010-11)
That the Commissioner of Income Tax (Appeals) ('CIT(A)’) erred on facts and in law in confirming disallowance of Rs. 58,807,548 made by learned Assessing Officer ‘AO’ under section 14Aofthe Income Tax Act, 1961 (‘the Act’).
That on the facts and circumstances of the case and in law, the Id. CIT(A) erred in not holding that in terms of the law laid down by the Hon’ble Delhi High Court in the cases of Cheminvest Ltd. vs. CIT (2015) 378 ITR 33 (Del) and CIT vs. Holcim India P. Ltd. (2014) 272 CTR 282 (Del), no disallowance under section 14A of the Act was required to be made, in respect of investment from which no exempt dividend income was earned during the relevant
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year.
That on the facts and circumstances of the case and in law, the Id. CIT(A) erred on the law by ignoring the revised grounds of appeal filed during the course of appellate proceedings.
Without prejudice, the CIT(A) erred on facts and in law in not appreciating that the disallowance made under section 14A of the Act cannot exceed exempt income of Rs.159,053 earned during the year as per the principle laid down by Hon’ble Delhi High Court in the case of McDonalds I Pvt. Ltd v Pr. CIT-6 (TS- 680-HC-2018-DEL).
Without prejudice that the CIT(A) erred on facts and in law in sustaining disallowance of Rs.64,547,177 (net disallowance of Rs. 58,807,548) made under section 14A of the Act by not appreciating the fact that at best the disallowance was required to be restricted to Rs.5,739,629 as offered by the Appellant being expenditure related to earning of exempt dividend income as computed by the appellant after excluding strategic investments wherefrom no dividend income was earned during the year, in the course of appellate proceedings.
That the Commissioner of Income Tax (Appeals) did not allow exemption ii/s 10A of Rs. 41,011,425 claimed by the Appellant on the grounds that no details of such exemption and Auditor’s Certificate were furnished with respect to such exemption however the Id. CIT(A) has erred on the facts and in law that, - the details of such exemption and certificate issued by a Chartered Accountant in Form 56F were duly furnished by the Appellant vide its submission dated Oct 30, 2014.
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- Without prejudice, no opportunity was given to the Appellant to furnish the same during the final course of appellate proceedings.
ITA No.8347/Del/2019 (ASSESSMENT YEAR 2015-16)
That the Commissioner of Income Tax (Appeals) ('CIT(A)’) has erred on facts and in law in confirming disallowance of Rs. 20,692,899 made on account of foreign exchange fluctuation losses on loans given to wholly owned subsidiaries.
That the learned CIT(A) has erred on facts and in law without appreciation the fact that loans were given for working capital requirements of the subsidiaries and the Appellant earns substantial operating revenue from such subsidiaries.
That thelearned CIT(A) has erred on facts and in law that the Appellant had duly offered profit on restatement of loans to the subsidiaries to tax in preceding years and losses on restatement such loans in current year are incidental to business and allowable under tax laws.
That thelearned CIT (A) has erred on the facts and in law that such loans were not advance for any fixed capital and losses on account of exchange fluctuation on loans needs to be transferred to the profit and loss account as per accounting principles and taxation laws.”
ITA No.8522/Del/2019
5 ITA Nos. 8346, 6347 & 8522/Del/2019 DION GLOBAL SOLUTIONS Ltd.
(ASSESSMENT YEAR 2010-11)
On the facts and circumstances of the case Ld. CIT(A) erred in deleting the addition of Rs. 5,93,30,747/- u/s 14A of the Income Tax Act, 1961.
On the facts and circumstances of the case Ld. CIT(A) erred in deleting the addition of Rs.50,00,000/- on account of IT Service Charges.
On the facts and circumstances of the case, the decision of the Ld.CIT(A) in allowing the set off of brought forward losses of M/s Religare Technova Global Solution Limited of the amount of Rs. 17,50,37,021/- u/s 72A of the Income tax Act, 1961 is not acceptable because Information Service Division of M/s Religare Technova Global Solution Limited was transferred via slump sale and not by the amalgamation. The entire company, M/s Religare Technova Global Solution Limited was not transferred by amalgamation. Hence, brought forward losses should not be allowed to set off
(B) In the course of appellate proceedings in Income Tax
Appellate Tribunal (“ITAT” for short), letter dated 18/02/2022 has
been received from Mr. Pardeep Kumar Lakhani, Insolvency
Professional. The relevant portion of the aforesaid letter is
reproduced as under:-
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“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), vide the order dated 18.08.2020 of Hon’ble National Company Law Tribunal (NCLT) New Delhi Bench (Copy enclosed. The undersigned was appointed as the Interim Resolution Professions vie the same order and was subsequently confirmed as Resolution Professional vide order dated 07/10/2020 of Hon’ble NCLT, New Delhi (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 sub-sections (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;
transferring, encumbering, alienating or disposing off by the (b) corporate debtor any of its assets or any legal right or beneficial
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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.
the recovery of any property by an owner or lessor where (d) 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.”
(B.1) Copies of orders dated 18/08/2022 and 07/10/2022 of the
National Company Law Tribunal, New Delhi (“NCLT” for short) were
also filed along with the aforesaid letter dated 18/02/2022. At the
time of hearing before us, the assessee was not physically
represented by anybody. In the absence of any physical
representation from the assessee’s side, we took cognizance of
aforesaid letter dated 18/02/2022 and accompanying aforesaid
orders dated 18/08/2020 and 07/10/2020 of NCLT. And we also
heard the Ld. Senior Departmental Representative (“Ld. Sr. DR” for
short) for Revenue, who was duly assisted by the Ld. Commissioner
of Income Tax, Departmental Representative [“Ld. CIT (DR)” for
short] at the time of hearing before us. In view of the aforesaid letter
8 ITA Nos. 8346, 6347 & 8522/Del/2019 DION GLOBAL SOLUTIONS Ltd. dated 18/02/2022 of Sh. Pardeep Kumar Lakhani and the aforesaid
accompanying orders dated 18/08/2020 and 07/10/2020 of NCLT;
the Learned Departmental Representatives submitted that the
present appeals may be dismissed. However, it was submitted by
them, that permission may be granted to approach Income Tax
Appellate Tribunal for restoration of the appeal (s) in case there is
any material change in the facts and circumstances.
(B.2) In view of the foregoing, as the Departmental Representatives
are in agreement, and further after giving due consideration to
aforesaid letter dated 18/02/2022 of Sh. Pardeep Kumar Lakhani
(and the accompanying orders dated 18/08/2022 and 07/10/2022
of NCLT); we hereby dismiss the three appeals.
(B.2.1) By way of abundant caution, we hereby clarify that the
assessee as well as Revenue will be at liberty to approach Income
Tax Appellate Tribunal for recall of this order and/or for restoration
of one or more of these appeal (s) if it is considered necessary in the
facts and circumstances of the case, having regard to the applicable
law; or if there is any material change in facts and
circumstances/legal position.
9 ITA Nos. 8346, 6347 & 8522/Del/2019 DION GLOBAL SOLUTIONS Ltd. (C) These three appeals are hereby disposed of in the aforesaid
terms. For statistical purposes, the three appeals are dismissed.
Order pronounced in open Court on 13th June, 2022.
Sd/- Sd/-
(CHANDRA MOHAN GARG) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 13 .06.2022 R.N Sr. PS*