DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 1, NASHIK V. M/S. K.G.S SUGAR AND INFRA CORPORATION LTD, NASHIK

ITA 1180/PUN/2019

AI Insights

The case involves the Income Tax Department appealing against the order of the CIT(A) which had deleted substantial additions made by the Assessing Officer on account of depreciation and additional depreciation claimed by M/s. KGS Sugar and Infra Corporation Ltd. for the Assessment Year 2015-16. The CIT(A)'s decision was based on the grounds that the machinery in question was not proven to be delivered, installed, or used by the assessee during the relevant financial year. The Revenue's appeal was complicated by the fact that the assessee had entered into a Corporate Insolvency Resolution Process (CIRP), and a resolution plan had been approved by the NCLT, which included the tax claims for A.Y. 2017-18 but potentially extinguished other claims prior to the NCLT's approval date.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398465 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Laws Referred To: Income-tax Act, 1961, Insolvency and Bankruptcy Code, 2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAMNATH MURKUNDE
• Assessee Lawyers: DEEPA KHARE
• Keywords: Depreciation; Additional depreciation

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES “A”, PUNE BEFORE DR.MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1180/PUN/2019 Assessment Year : 2015-16 DCIT, Circle-1, Nashik Vs. M/s.KGS sugar and Infra Corporation Ltd., 9 Sudarsan CHS, Mahant Road, Vile Parle (East), Mumbai – 400 057 PAN : AAACK9762C Appellant Respondent आदेश / ORDER PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The captioned appeal at the instance of Revenue pertaining to A.Y. 2015-16 is directed against the order dated 07.05.2019 framed by ld.CIT(A)-1, Nashik arising out of Assessment Order dated 30.12.2017 passed u/s.143(3) of the Income-tax Act, 1961 (in short ‘the Act’). 2. Revenue has raised following grounds of appeal : “1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs.8,77,00,245/- on account of depreciation and addition of Rs.11,69,33,660/-on account of additional depreciation ignoring the fact that the Tribunal has not questioned the validity of passing an ex-parte order u/s 144, thereby accepting the non-cooperative attitude of the assessee and yet setting aside the order of the AO on the ground that the AO did not provide opportunity for cross examination. Appellant by : Shri Ramnath Murkunde Respondent by : Smt. Deepa Khare Date of hearing : 04.06.2025 Date of pronouncement : 06.06.2025 ITA No.1180/PUN/2019 M/s. KGS Sugar and Infra Corporation Ltd. 2 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs.8,77,00,245/- on account of depreciation & addition of Rs.11,69,33,660/ on account of additional depreciation ignoring the fact that the assessee company was not able to prove that the machinery had been delivered to it during F.Y. 2014-15 let alone the substantiation regarding installation and put to use. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs.8,77,00,245/- on account of depreciation & addition of Rs.11,69,33,660/-on account of additional depreciation ignoring the fact that the assessee company could not produce the original bills/voucher to substantiate its claim of depreciation on machinery. 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.22,67,44,602/- made u/s 32AC(1) of the LT. Act ignoring the fact that the assessee company could not substantiate his claim regarding installation of the machinery and put to use in F.Y. 2014-15. 5. The order of the Ld. CIT(A) may be vacated and that of the Assessing Officer may be restored.” 3. At the outset, Ld. Counsel for the respondent-assessee submitted that pursuant to the assessee company undergoing Corporate Insolvency Resolution process under the provisions of Insolvency and Bankruptcy Code, 2016, Hon’ble National Company Law Tribunal (NCLT), Mumbai vide its order dated 11.08.2023 has approved the resolution plan submitted by Gangamai Industries and Construction Limited in favour of the Debtor Company. She further submitted that as per NCLT order dated 11.08.2023, all the dues including the statutory dues owed to the Central Government, any State or any Local Authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval u/s.31 could be continued. She further referring to the preliminary objection and clarification placed on record stated that the income-tax department has only filed claim against the ITA No.1180/PUN/2019 M/s. KGS Sugar and Infra Corporation Ltd. 3 Corporate Debtor during its CIRP process for Rs.2,35,360/-and Rs.52,54,51,815/- for A.Y. 2017-18 and this claim forms part of the resolution plan and apart from this claim the income-tax department can neither make any further claim against the Corporate Debtor, i.e. the assessee for the period preceding 11.08.2023 nor can the department initiate or continue any proceedings which were initiated against the Corporate Debtor prior to 11.08.2023. 4. On the other hand, Ld. Departmental Representative stated that this contention of ld. Counsel for the respondent-assessee that the appeal of the Revenue is not maintainable is not correct. The order of Hon’ble NCLT, Mumbai Bench is dated 11.08.2023 which is much after the date of impugned order as well as filing of the instant appeal. He submitted that the issue may be restored to the file of ld. Jurisdictional Assessing Officer for necessary examination of the NCLT order dated 11.08.2023 and to assess the status of outstanding demand of the income-tax department. 5. We have heard the rival contentions and perused the record placed before us. Revenue is in appeal before this Tribunal against the relief given by ld.CIT(A) deleting the addition of Rs.8,77,00,245/- on account of depreciation and deletion of addition of Rs.11,69,33,660/- on account of additional depreciation and also against the deletion of addition of Rs.22,67,44,602/- made by Assessing Officer u/s.32AC(1) of the Act. 6. Before us, Ld. Counsel for the respondent-assessee has filed the copy of order of the Hon’ble NCLT, Mumbai Bench dated 11.08.2023 and stated that since the only claim of the income-tax ITA No.1180/PUN/2019 M/s. KGS Sugar and Infra Corporation Ltd. 4 department was for A.Y. 2017-18 at Rs.2,35,360/- and Rs.52,54,61,815/- which was part of the resolution plan, all the other dues of the income-tax department which are not part of the resolution plan stands extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval u/s.31 could be continued. 7. We observe that the assessment order in the case of assessee for A.Y. 2015-16 was framed on 30.12.2017 and against the additions made by ld. AO assessee succeeded in the appeal filed before ld.CIT(A) vide order dated 07.05.2019. Revenue preferred appeal before this Tribunal vide Form No.36 dated 03.08.2019 and the copy of order of Hon’ble NCLT, Mumbai Bench is dated 11.08.2023. Under these given facts and circumstances, we deem it proper to restore all the issued raised in the instant appeal to the file of ld. Jurisdictional Assessing Officer before whom assessee shall furnish the copy of order Hon’ble NCLT, Mumbai Bench dated 11.08.2023 and the same shall be examined by ld. JAO and necessary action in accordance with law shall be taken thereafter for the reason that assessee has been claiming that all the dues of the Revenue stands extinguished for the year under appeal on account of the order of NCLT dated 11.08.2023. We are therefore not adjudicating the issues raised on merit by the Revenue in the instant appeal. Needless to say, ld.JAO shall afford reasonable opportunity to the respondent-assessee. Ground of appeal raised by the Revenue are allowed for statistical purposes. ITA No.1180/PUN/2019 M/s. KGS Sugar and Infra Corporation Ltd. 5 8. In the result, appeal of the Revenue is allowed for statistical purposes. Order pronounced on this 06th day of June, 2025. Sd/- Sd/- (VINAY BHAMORE) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; \u0001दनांक / Dated : 06th June, 2025. Satish आदेश क\u0002 \u0003ितिलिप अ ेिषत / Copy of the Order forwarded to : 1. अपीलाथ / The Appellant. 2. \u000eयथ / The Respondent. 3. The Pr. CIT concerned. 4. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, “A” ब\u0014च, पुणे / DR, ITAT, “A” Bench, Pune. 5. गाड\u0004 फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "