DCIT221, MUMBAI vs. NRC LIMITED, MUMBAI

ITA 1333/MUM/2026Status: DisposedITAT Mumbai29 September 2026AY 2018-1912 pages
AI SummaryDismissed

What were the facts?

The Department (Revenue) filed three appeals against the orders of the CIT(A) for Assessment Years 2013-14, 2014-15, and 2018-19. The core issue pertains to reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961, against NRC Ltd. (assessee). The assessee had declared a total loss for AY 2013-14, which was accepted in the original assessment under Section 143(3). Subsequently, insolvency proceedings were initiated against the assessee, and a Resolution Plan was approved by the NCLT on March 13, 2020. The Assessing Officer reopened the assessment for AY 2013-14 on March 28, 2021, proposing to disallow depreciation of Rs. 8,38,63,725/-, thereby recomputing the loss. The CIT(A) quashed the reassessment proceedings, holding them to be without jurisdiction post-approval of the Resolution Plan.

What did the Tribunal hold?

The Tribunal upheld the order of the CIT(A), dismissing the Revenue's appeals. The primary finding was that the reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961, were invalid due to the prior approval of the Resolution Plan under the Insolvency and Bankruptcy Code, 2016 (IBC). The Tribunal reasoned that a reduction in the determined loss for an earlier assessment year has a consequential bearing on the tax attributes of the Corporate Debtor, including losses available for carry forward and set-off in subsequent years. Therefore, such proceedings directly impacted the tax position relating to the period prior to the Resolution Plan's approval. The Tribunal referred to the decisions of the Bombay High Court in Alok Industries Ltd. v. ACIT and Uttam Value Steels Ltd. v. ACIT, which considered the effect of approved Resolution Plans on reassessment proceedings for periods prior to approval. The Tribunal noted that while the Resolution Plan allowed for carry forward of losses, this did not grant the Revenue an unrestricted power to reopen assessments concluded before the plan's approval. The Tribunal found no infirmity in the CIT(A)'s conclusion that reassessment proceedings could not be validly initiated after the Resolution Plan's approval. Consequently, the reassessment proceedings were liable to fail on jurisdictional grounds. The Tribunal found it unnecessary to adjudicate the validity of the reopening under the first proviso to Section 147 or the issue of change of opinion, as well as the allowability of depreciation, as these became academic. The addition/disallowance of Rs. 8,38,63,725/- made by the AO was consequently deleted.

What were the issues?

1. Whether the reassessment proceedings initiated under Section 147 of the Income-tax Act, 1961, were void ab initio solely on account of the approval of the Resolution Plan under the Insolvency and Bankruptcy Code, 2016 (IBC), considering the assessment resulted in a reduction of carry-forward loss and not the recovery of a tax demand? - Revenue argued that the reassessment merely determined the quantum of loss and did not enforce an extinguished claim. It contended that the Supreme Court's decision in Ghanashyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. pertains to extinguishment of statutory dues, not determination of losses. Revenue also pointed to Clause (xiv) of the Resolution Plan permitting carry forward of losses, implying the AO's jurisdiction. - Assessee argued that post-approval of the Resolution Plan under Section 31(1) of the IBC, prior period claims and proceedings are dealt with by the plan and cannot be reopened to the prejudice of the Corporate Debtor. It relied on Ghanashyam Mishra & Sons Pvt. Ltd., PCIT v. Monnet Ispat & Energy Ltd., Alok Industries Ltd. v. ACIT, and Uttam Value Steels Ltd. v. ACIT. The assessee also contended that Clause 3.3.6(i) of the plan extinguished tax liabilities prior to the Effective Date. 2. Whether the CIT(A) erred in applying the ratio of Ghanashyam Mishra & Sons Pvt. Ltd. to the present case, where the proceedings were confined to the determination of the quantum of loss? - Revenue argued that the said judgment dealt with extinguishment of statutory dues, not the determination of carry-forward losses. - Assessee relied on Ghanashyam Mishra & Sons Pvt. Ltd. and other High Court decisions, asserting that all prior claims are dealt with by the Resolution Plan.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 148,Section 144,Section 144B,Section 31(1),Section 238,Section 32

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: SHRI SANDEEP GOSAIN & SHRI JAGADISH

Pronounced: 29.09.2026

Heard together (3 matters)

ITA 1331/MUM/2026
ITA 1332/MUM/2026
ITA 1333/MUM/2026

Read from the judgment's own cause title. This page is filed under one of them.

PER SHRI SANDEEP GOSAIN, JUDICIAL MEMBER:

These three appeals have been filed by the Department against the orders of the learned CIT(A), vide DIN No. ITBA/NFAC/S/250/2025-

ITA 1331, 1332 and 1333/MUM/2026

26/1083061343(1) dated 04.02.2026 for Assessment Year 2013-14, DIN No. ITBA/NFAC/S/250/2025-26/1083074657(1) dated 04.02.2

The order continues below.

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