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Facts
The Revenue filed appeals against a CIT (Appeals) order deleting an addition of Rs. 13.63 Crores made by the Assessing Officer under Section 14 read with Rule 8D of the Income Tax Rules. The assessee contended that the appeals were not maintainable because the National Company Law Tribunal (NCLT) had already approved a resolution plan and granted a moratorium under Section 7 of the Insolvency and Bankruptcy Code, 2016.
Held
The Tribunal noted that the Departmental Representative could not controvert the factual position regarding the NCLT proceedings and the approved resolution plan. Consequently, the Tribunal held that the present appeals could not continue and served no useful purpose. All appeals filed by the Revenue were dismissed, with liberty to seek revival if the NCLT order is reversed or modified by a higher judicial forum.
Key Issues
Whether appeals filed by the Revenue are maintainable when the assessee company is undergoing a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016, and a resolution plan has been approved by the NCLT.
Sections Cited
14
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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI SHAMIM YAHYA & MS. MADHUMITA ROY
Order : 14.06.2024 ORDER PER BENCH : These appeals by the Revenue are directed against the common order of the ld. CIT (Appeals)-23, New Delhi dated 29.12.2017 for the assessment years 2013-14, 2014-15 & 2015-16.
2 to 1604/DEL/2018 2. Since the issues are common and connected, these are being disposed of by this common order. 3. Grounds of appeal taken by the assessee are common in all the years except the difference in amount. Hence, we are reproducing grounds of appeal taken in AY 2013-14 which read as under :- “1. The order of Ld. CIT (A) is not correct in law and on facts.
2. On the facts and circumstances of the case, Ld. CIT (A) has erred in law deleting the addition of Rs.13,63,58,723/- made by Assessing Officer on account of disallowance u/s 14 r.w. Rule 8D of the Income Tax Rules, 1962.”
3. We have heard both the parties and perused the records.
4. Learned counsel for the assessee contended before us that since the National Company Law Tribunal (NCLT) is seized of the proceedings initiated under section 7 of the Insolvency and Bankruptcy Code, 2016 and has already approved a resolution plan and granted moratorium in respect of any other proceedings pending before any authority or Tribunal etc., the present appeals cannot continue. He submitted, under similar circumstances, appeal filed by the Department in case of M/s. Bhushan Energy Ltd., another group entity, has been dismissed by the Tribunal. In this context, he placed on record order dated 17.04.2023 passed in ITA No. 5429/Del/2015 and C.O. No. ITA Nos. 5424 & 5425/Del/2015 and 159/Del/2019. He further relied upon the decision of the ITAT in the case of ACIT vs. Bhushan Steel Ltd. in ITA Nos.5424 & 5425/Del/2015 order dated 12.09.2023. Thus, he submitted that the appeals of the department have to be dismissed.
3 to 1604/DEL/2018 5. Learned Departmental Representative for the Revenue could not controvert the factual position brought on record by the assessee.
Having considered rival submissions and perused materials on record, we find that certain financial creditors have filed applications under Insolvency and Bankruptcy Code, 2016 before NCLT seeking initiation of corporate insolvency resolution process (CIRP). It is observed, NCLT has passed an order on 15.05.2018 approving the resolution plan/process. Thus, in terms with the order passed by NCLT, the present proceedings before the Tribunal cannot continue. That being the position in law, no useful purpose is going to be served in continuing the present proceedings. Therefore, in our considered opinion, the present appeals need to be consigned to the records.
Our above order applies mutatis mutandis to all the assessment years in appeal.
In view of the aforesaid, all the appeals filed by the Revenue are dismissed. However, liberty is granted to the Revenue to seek revival of the appeals in case order of NCLT is either reversed or modified or varied by any higher judicial forum or, if it is necessary to do so in the interest of the parties. Order pronounced in the open court on this 14th day of June, 2024. SD/- SD/- (MADHUMITA ROY) (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated the 14TH day of June, 2024/TS