ACIT Central Circle 2(3), CHENNAI V. Surana Industries Ltd., CHENNAI

ITA 2458/CHNY/2017

AI Insights

The case involves appeals by the Revenue against the orders of the Commissioner of Income Tax (Appeals)-18, Chennai, which pertained to the assessment years 2010-11 and 2011-12. The appeals were related to the computation of book profit under section 115JB of the Income Tax Act, 1961, and the addition of interest income earned from investments in temporary deposits and mutual funds before the start of business activities. The companies involved, Surana Industries Ltd. and Surana Power Ltd., were undergoing a Corporate Insolvency Resolution Process (CIRP) as initiated by the NCLT, which led to a moratorium on legal proceedings against them. The Tribunal decided to restore the matter to the AO for re-evaluation post-CIRP completion, acknowledging the ongoing insolvency proceedings and the legal protections afforded to the companies under the IBC.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134853 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-07-2023
• Assessment Year: 2011-2012
• Appeal Filed On: 08-10-2017
• Laws Referred To: Income Tax Act, 1961, Insolvency and Bankruptcy Code, 2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Liquidation
• Section: 153A

Judgement Text

आयकर अपीलीय अिधकरण, ‘ए’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी मंजुनाथ. जी, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANJUNATHA.G, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.: 2457 & 2458/CHNY/2017 िनधाᭅरण वषᭅ/Assessment Years: 2010-11 2011-12 The ACIT, Central Circle – 2(3), Chennai – 34. vs. Surana Industries Ltd., 29, Whites Road, 2 nd Floor, Royapettah, Chennai – 600 014. PAN: AAACS 3123M (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) & आयकर अपील सं./ITA Nos.: 2459/CHNY/2017 िनधाᭅरण वषᭅ/Assessment Year: 2011-12 The ACIT, Central Circle – 2(3), Chennai – 34. vs. Surana Power Ltd., 29, Whites Road, 2 nd Floor, Royapettah, Chennai – 600 014. PAN: AAMCS 8436M (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri R. Mohan Reddy,CIT ᮧ᭜यथᱮ कᳱ ओर से/Respondents by : None सुनवाई कᳱ तारीख/Date of Hearing : 24.07.2023 घोषणा कᳱ तारीख/Date of Pronouncement : 24.07.2023 2 ITA Nos. 2457 to 2459/Chny/2017 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: These appeals by the Revenue are arising out of the two different orders of the Commissioner of Income Tax (Appeals)-18, Chennai in ITA Nos.146 & 147/16-17 and 145/16-17 dated 04.07.2017 & 05.07.2023. The assessments were framed by the ACIT, Central Circle 2(3), Chennai for the assessment years 2010- 11 & 2011-12 u/s.143(3) r.w.s. 153A of the Income Tax Act, 1961 (hereinafter the ‘Act’), vide orders of even date 31.03.2016. 2. These three appeals by Revenue, when called for hearing none is present from assessees side but it is noticed that in ITA Nos.2457 & 2458/CHNY/2017, there is a letter dated 21.09.2018 whereby the assessee has contended that the company is undergoing ‘Corporate Insolvency Resolution Process’ (CIRP) initiated by National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC) 2016. For this, assessee has written as under:- Surana lndustries Limited is currently undergoing "Corporate Insolvency Resolution Process" (CIRP) initiated by the "National Company Law Tribunal" (NCLT) under the "Insolvency and Bankruptcy Code, (|BC) 2016. The Order of the Tribunal was pronounced on 2nd January, 2018. The copy of the same is attached for your reference. 3 ITA Nos. 2457 to 2459/Chny/2017 Based on the above Order, the NCLT Court has appointed an Insolvency Professional who shall take charge of the entire assets of the Company and run the Company with the approval of the Financial Creditors, Viz. the banks. The Resolution Professional has since taken charge based on the Order dt. 2 nd January, 2018. The Order Copy is also attached. National Company Law Tribunal (NCLT) Order, in para 11, the Adjudicating Authority of the National Company Law Tribunal (NCLT) has declared a Moratorium Period until the completion of the CIRP period thereby prohibiting from the following, namely:- (a) The institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including executing any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority, (b) Transferring, encumbering, alienating or disposing of by the corporate debtor any of its assets or any legal right or beneficial 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 Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (d) The recovery of any property by an owner or lessor where such property is occupied by or in possession of the corporate Debtor. Under the circumstance, we kindly request you, to kindly put on hold any proceedings initiated against the Corporate Debtor until the completion of the Corporate Insolvency Resolution Process Period and oblige. Similar letter is also filed in ITA No.2459/CHNY/2017. 3. The only common issue in these three appeals of Revenue is against the order of CIT(A) deleting the addition made by the AO on computation of book profit u/s.115JB of the Act and one further issue in ITA No.2459/CHNY/2017 is deletion of addition made by AO on interest income earned from investment in temporary deposits and mutual funds before start of the business activity. 4 ITA Nos. 2457 to 2459/Chny/2017 4. Despite service of notice, none is present from assessee’s side since 2018 and on going through the assessment orders and the order of CIT(A), we noted that since the companies are under liquidation and Corporate Insolvency Resolution Process is in progress, we feel that the matter be restored back to the file of the AO for fresh adjudication. The AO will readjudicate the issues after completion of Corporate Insolvency Resolution Process initiated by NCLT under the Insolvency and Bankruptcy Code 2016. In term of the above, all these appeals are restored back to the file of the AO. The Revenue’s appeals are allowed for statistical purposes. 5. In the result, the appeals filed by the Revenue in ITA Nos.2457, 2458 & 2459/CHNY/2017 are allowed for statistical purposes. Order pronounced in the open court on 24 th July, 2023 at Chennai. Sd/- Sd/- (मंजुनाथ. जी) (MANJUNATHA.G) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 24 th July, 2023 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकरआयुᲦ /CIT 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF.