APPLIED ELECTRO MAGNETICS PRIVATE LIMITED,NEW DELHI V. DCIT, CIRCLE-1(1), NEW DELHI

ITA 2646/DEL/2024

AI Insights

The case involves Applied Electro Magnetics Private Limited, which appealed against the order of the Learned Commissioner of Income-Tax (Appeals), Vadodara, which upheld the additions made by the Centralized Processing Assessee under section 143(3) of the Income Tax Act, 1961. The additions were related to the income from business, which was significantly higher than what the assessee declared. The appellant contested the adjustments and the proceedings initiated for the assessment year 2018-19, arguing that these were unsustainable in light of the Insolvency & Bankruptcy Code, 2016, and a resolution plan approved by the NCLT. The Tribunal agreed with the appellant's contention that the dues for periods prior to the effective date of the resolution plan were extinguished, thus allowing the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473266 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Laws Referred To: Income-Tax Act, 1961, Insolvency & Bankruptcy Code 2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHISH TRIPATHI
• Assessee Lawyers: SANJEEV CHAUDHARY
• Section: 143(3); 250; 143(1); 48; 43B

Judgement Text

" INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI VIMAL KUMAR, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER ITA No. 2646/DEL/2024 Assessment Year: 2018-19 Applied Electro Magnetics Private Limited, 504, 5th Floor, Savitri Cinema Complex, Greater Kailash-2, New Delhi PIN 1100 48 PAN No. AAACA1998G Vs. DCIT, Circle-1 (1), New Delhi (Appellant) (Respondent) O R D E R PER VIMAL KUMAR, JUDICIAL MEMBER: The appeal filed by the appellant/assessee is against order dated 12.03.2024 passed by Learned Commissioner of Income- Tax(Appeals), Vadodara (hereinafter referred as ‘Ld. CIT(A)’) under Sections 250 of the Income-Tax Act, 1961 (hereinafter referred as “the Act”) arising out of assessment order dated 19.03.2020 under Section 143(3) of the Act of the Centralized Processing Assessee by: Shri Sanjeev Chaudhary, Adv. Department by: Shri Ashish Tripathi, Sr. DR Date of Hearing: 25.03.2025 Date of pronouncement: 04.04.2025 ITA No.2646/Del/2024 2 Centre, Bangalore (hereinafter referred as ‘Ld. A.O.’) for the assessment year 2018-19. 2. Brief facts of the case are that the appellant/assessee filed the return electronically on 31.10.2018 declaring income of Rs.17,84,39,935/-. An intimation under Section 143(1) of the Act dated 19.03.2020 passed by the ADIT, CPC, Bangalore was received by the appellant/assessee. The income from business was computed at Rs.25,21,79,037/- instead of Rs.17,84,39,935/-. An adjustment of Rs.7,37,39,102/- was made vide order dated 19.03.2020 by the ld. AO. 3 Against order dated 19.03.2020, the appellant/assessee preferred an appeal before the Ld. CIT(A) which was dismissed vide order dated 12.03.2024. 4. Being aggrieved, the appellant/assessee preferred present appeal with following grounds: “Ground no 1 Ld. CPC has erred in law and facts of the case while rejecting the rectification filed by the assessee on 22.04.2020. Ground no 2 Ld. CIT(A) has erred in law and facts of the case in upholding the addition of Rs. 6.44,42,606/- and ITA No.2646/Del/2024 3 79,21,952/- made by the Ld. CPC under section 43B of the Income Tax Act 1961. Ground no 3 Ld. CPC/ Ld. CIT (A) has erred in law and facts of the case in initiating any proceedings Including assessment/re- assessment/appeal/revision/rectification etc. against the assessee in relation to the period prior to the date of the NCLT order dated 02.04.2019 approving the Resolution Plan for the assessee. The proceedings for the AY 2018-19 are bad in law and unsustainable in view of the Insolvency & Bankruptcy Code 2016 and also in view of the settled law by Hon'ble Supreme Court of India. Ground no. 4 Ld. CPC/ Ld. CIT (A) has erred in law and facts of the case without prejudice to the above grounds for not allowing set off of brought forward losses with the income determined after disallowances. Ground no 5 The assessee may please be allowed the right to add/delete/modify any of the grounds of appeal at any stage.” 5. At the time of hearing, Learned Authorised Representative for the appellant/assessee submitted that the ACIT, Circle-1(1), Delhi in letter dated 24.05.2024 has mentioned as under:- “Order pursuant to Hon'ble Delhi HC ORDER for AY 2017-18, 2018-19 & 2019-20 The Hon'ble Delhi High Court vide order dated 03.05.2024 directed the AO to duly examine the claims of refunds raised by the assessee for A.Y. 2017-18,2018-19 and 2019-20, and to dispose of the same by way of an order As directed, the claims of the assessee for respective A.Ys were examined but not found to be tenable considering that all the demand/refunds payable up to AY ITA No.2646/Del/2024 4 2019-20 have been considered and incorporated in the NCLT order dated 02.04.2019. As per the Resolution Plan under the Insolvency and bankruptcy code, in the Schedule 5, all dues arising under the Income Tax Act, 1961 for periods prior to the effective date pursuant to this plan stand extinguished. \"Effective date\" as per Schedule 1 of the said resolution plan is defined as under: \"Effective date means 15 days from the date of receipt of the Hon'ble NCLT order by the resolution applicant\" Thus, effective date is 17.04.2019. Therefore, all the payables and receivables of the assessee of the periods prior to the effective date have been taken into account while creating dues in the resolution plan which stands extinguished as per the plan. Therefore, refunds of the assessee for periods up to FY 2018-19 (i.e. AY 2019- 20) have been accounted for in the resolution plan.” 6. Learned Authorised Representative for the Revenue relied on the orders of Ld. AO and Ld. CIT(A). 7. From examination of records in the light of aforesaid rival contentions, it is crystal clear that the ACIT, Circle-1(1), Delhi in letter dated 24.05.2024 has specifically mentioned that all payable and receivable of the assessee of the periods prior to effective date 17.04.2019 stands extinguished as per the resolution plan, approved by the NCLT vide order dated ITA No.2646/Del/2024 5 02.04.2019. Therefore, grounds of appeal nos. 2 and 3 are allowed. 8. Ground nos. 1, 4 and 5 being not pressed are left open. 9. In the result, the appeal of the appellant is allowed. Order pronounced in the open court on 04/04/2025. Sd/- Sd/- (BRAJESH KUMAR) (VIMAL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 04/04/2025 Mohan Lal Copy forwarded to - 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "