ACIT, Circle- 21(1), New Delhi V. Reverse Logistics Company Pvt. Ltd., New Delhi

ITA 3536/DEL/2018

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals) - XXV, New Delhi, which had granted relief to Reverse Logistics Company Pvt. Ltd. concerning certain additions and disallowances made during the assessment year 2014-15. The Revenue challenged the CIT(A)'s decision, which had reduced the loss declared by the assessee and allowed certain deductions. However, the matter was complicated by the fact that the company had been ordered to be liquidated by the NCLT under the Insolvency and Bankruptcy Code, 2016, leading to the dismissal of the appeal by the Tribunal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121674 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 27-03-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 10-05-2018
• Laws Referred To: Income Tax Act, 1961, Section 143(3) of the Income Tax Act, 1961, Section 37(1) of the Income Tax Act, 1961, CBT Circular No. 9 of 2007, IBC 2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 37; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.3536/DEL/2018 Assessment Year 2014-15 ACIT Circle-21(1) New Delhi. Vs. Reverse Logistics Company Pvt. Ltd. Khasra no.337, 1 st Floor, Choudhry Satbir Complex, M.G. Road, Near CRC-2, Village Sultanpur, New Delhi TAN/PAN: AAECR0690J (Appellant) (Respondent) Appellant by: None Respondent by: Shri H.K. Choudhary, CIT-DR Date of hearing: 28 03 2023 Date of pronouncement: 15 06 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T h e c a p t i on ed a p p e a l ha s be e n fi l e d b y t h e R e ve nu e a ga i n st t h e or de r o f t h e l d . C o m m i s si o ne r o f In c o m e T a x ( A p pe a ls) - X X V , N e w D e l hi ( ‘ C I T ( A ) ’ i n s ho r t ) d a t e d 23 . 02 . 2 0 18 ar i si n g fr om t h e a s s e s sm e nt or de r d a te d 2 7 . 1 2. 2 01 6 p a s s e d b y t h e A s s e s si n g O f f ic e r ( A O ) u n d e r S e c ti o n 14 3( 3) o f t h e In c om e T a x A c t , 19 61 ( t h e A ct) c o n c e r n in g A Y 20 1 4 - 1 5. 2. T h e gr o un d s o f a p p e a l r a i s e d b y t h e R ev e nu e r e a d a s u nd e r : “ 1 . O n fa c t s a n d u n d e r c i r c u m s t a n c e s o f t h e c a s e t he L d . C I T ( A ) h a s e r r e d i n l a w a n d fa c t s i n d e l e t i n g t h e a d d i t i o n o f R s . 1 ,6 5 , 5 2 , 2 4 5 / - o n a c c o u n t o f d i s a l l o w a n c e o f l o s s i n s t o c k o n f i r e w i t h o u t a l l o wi n g n e c e s s a r y a d j u s t m e n t o n a c c o u n t o f s h o r t m a t e r i a l a n d 1 0 % d e ad s t o c k a s c o m p u t e d b y I n s u r a n c e C o m p a n y i n a c c o r d a n c e w i t h F I F O m e t h o d. I.T.A. No.3536/Del/2018 2 2 . O n f a c t s a n d u n d e r c i r c u m s t a n c e s o f t h e c a s e t h e L d . C I T ( A ) h a s e r r e d i n l a w a n d fa c t s i n d e l e t i n g t h e a d d i t i o n o f R s . 3 ,7 4 , 1 3 , 4 8 6 / - o n a c c o u n t o f d i s a l l o w a n c e o f P r e m i u m o n s t o c k o p t i o n ( E S O P ) i g n or i n g t h e m a n d a t o r y p r o v i s i o n o f C B D T C i r c u l a r N o . 9 o f 2 0 0 7 a n d i t s c ap i t a l n a t u r e w h i c h i s n o t a n a l l o w a b l e e x p e n d i t u r e u / s 3 7 ( 1 ) o f t h e I T A ct . ” 3. T h e a s se s s e e f i l e d r e t ur n o f i n c om e fo r A s se s sm en t Y e a r 2 0 14 - 15 i n q u e st i on o n 3 0 . 11 . 20 1 4 d ec l a r i n g a l o s s a t R s. 2 3, 0 5 , 06 , 46 6 / - . I n t he sc r u ti n y a ss e s s m e n t , t h e l os s r e t ur ne d b y th e as s e ss e e w a s b r o u g ht do w n t o R s. 1 7, 6 4 , 74 , 16 0 / - b y m a ki n g c e r t a i n a dd i ti on s a n d di sa l l o w a n c e s. 4. I n t h e f i r s t a p p e a l , t he C I T ( A ) ha s g r a n t e d r e l ie f o n t h e i s s u e s r a i se d b e fo r e h i m . T he Re v e nu e i s i n a p pe a l a g a i n st t h e a f o r e s a i d o r d e r of t he C I T ( A ) . 5. T h e m a t t e r w a s l i st e d f o r h e a r i n g b e fo r e IT A T o n m u l t i p l e oc c a si on s a s p er o r d e r s h e e t . H ow e v er , no n e a p pe a r ed f or t h e a s se s se e e x c e pt o n o n e o c c a s i o n w h e r e o ne S hr i A r p i t G oe l , CA a pp e a r e d a n d a s ke d fo r a d j o ur nm e nt . I t i s f u r t he r s e e n f r o m t h e r e c or d t h a t a s p e r l et t e r d a te d 2 8 . 03 . 2 0 23 a d dr e s s e d t o T r ib u n a l , i t wa s p oi nt e d o ut b y S hr i A r p i t G oe l , V a i s h A s so c ia t e s A d v oc a t e s t h at t he y a r e n o t i n a po si t io n t o pr os e c u t e t h e s a i d Re v e nu e A p p e a l i n the a b s e nc e o f a n y i n st r u c t i on f r o m t h e i r c l i e nt de sp i t e e f f o r t s m a d e i n t hi s r e g ar d. I t w a s fu r t h er su bm i t te d t ha t a s p e r i n f or ma t i on a v a i l a b l e i n p u b li c d om a i n, t he a s s e s s e e h a s b e e n d i r e c t e d to b e li q ui da t e d v i de o r d e r da t e d 02 . 11 . 20 21 pa s s e d b y t h e N C LT . 6. T h e r e l e v a n t op e r a t i ve p a r a gr a p h s o f t h e o r d er pa s se d b y t he N C LT p l a c e d b e f o r e us r e a d a s u n d e r : “ 1 7 . A c c o rd i n g l y , b y e x e r c i s i n g o u r p o w e r u n d e r S e ct i o n 3 3 s u b - S e c t i o n ( 1 ) ( a ) p a s s t h e f o l l o w i n g o r d e r : - i T h e C o r p o r a t e d e b t o r i s l i q u i d a t e d w i t h i m m e d i a t e e f f e c t i n t h e m a n n e r p r o v id e d u n d e r C h a p t e r I I I P a r t I I o f t h e I B C 2 0 1 6 . i i . S i n c e t h e C O C a t I t e m n o . 1 0 h a s a p p r o v e d t h e a pp o i n t m e n t o f R e s o l u t i o n P r o f e s s i o n a l , M r P a w a n K u m a r A g a r w a l a s l i q u i d a to r , h e n c e , w e a p p r o v e I.T.A. No.3536/Del/2018 3 t h e a p p o i n t m e n t o f R e s o l u t i o n P r o f e s s i o n a l M r . P a w an K u m a r A g a r w a l t o a c t a s a l i q u id a t o r u / s 3 4 ( 1 ) I B C , 2 0 1 6 . i i i . T h e l i q u i d a t o r i s d i r e c t e d t o t a k e c u s t o d y a n d c o n t r o l o f t h e a s s e t s , p r o p e r t y o f t h e C o r p o r a t e D e b to r w i t h i m m e d i a t e e f fe c t a n d m a d e a p u b l i c a n n o u n c e m e n t c l e a r l y s t a t i n g th a t th e C o r p o r a t e D e bt o r i s u n d e r L i q u i d a t i o n i n t e r m s o f R e g u l a t i o n 1 2 o f t h e I n s o l ve n c y a n d B a n k r u p t c y B o a r d o f I n d i a ( L i q u i d a t i o n P ro c e s s ) R e g u l a t i o n s , 20 1 6 ; i v . T h e P r o v i s i o n o f S e c t i o n 3 3 s u b - S e c t i o n 5 , 6 a n d 7 I B C , 2 0 1 6 s h a ll c o m e i n t o f o r c e w i t h i m m e d i a t e e f f e c t . T h e O r d e r o f M o r at o r i u m p a s s e d u n d e r S e c t i o n 1 4 o f t h e I n s o l v e n c y a n d B a n k r u p t c y C o d e , 20 1 6 s h a l l c e a s e t o h a v e i t s e f f e c t a n d a f r e s h M o r a t o r i u m u n d e r S e c t i o n 3 3 (5 ) o f t h e I n s o l v e n c y a n d B a n k r u p t c y C o d e s h a l l c o m m e n c e ; v . L i q u i d a to r s h a l l f o l l o w u p a n d c o n t i n u e t o i n v e st i g a t e t h e f i n a n c i a l a f f a i r s o f t h e C o r p o r a t e D e b t o r t o d e t e r m i n e t h e u nd e r v a lu e d & p r e f e r e n t i a l t r a n s a c t i o n s a n d F r a u d u l e n t T r a d i n g o r w r o n g f u l t r ad i n g e t c . , i f a n y . v i . T h i s O r d e r s h a l l b e d e e m e d t o b e a n o t i c e o f d is c h a r g e t o t h e o f f i c e r s , e m p l o y e e s a n d t h e w o r k m e n o f t h e c o r p o r a t e d e b t o r as p e r S e c t i o n 3 3 ( 7 ) o f t h e I n s o l v e n c y a n d B a n k r u p t c y C o d e , 2 0 1 6 ; v i i . T h e L i q u id a t o r s h a l l s u b m i t a P r e l i m i n a r y R e p or t t o t h e A d j u d i c a t in g A u t h o r i t y w i t h i n s e v e n t y - f i v e ( 7 5 ) d a y s f r o m t h e L iq u i d a t i o n c o m m e n c e m e n t d a t e a s p e r R e g u la t i o n 1 3 o f t h e I n so l v e n c y a n d B a nk r u p t c y ( L i q u i d a t io n P r o c e s s ) R e g u l a t i o n s , 2 0 1 6 ; v i i i . T h e R e g i s t r y i s d i r e c t e d t o c o m m u n i c a t e a c o py o f t h i s O r d e r t o t h e F i n a n c i a l C r e d i t o r , t h e C o r p o r a t e D e b t o r a n d L i q u ida t o r M r . P a w a n K u m a r A g a r w a l I P i m m e d i a t e l y ; i x . A c o p y o f t h i s O r d e r b e s e n t b y t h e R e g i s t r y a nd L i q u i d a t o r t o t h e R e g i s t r a r o f C o m p a n i e s ( R o C ) , N C T o f D e l h i & H a r y a na f o r u p d a t i n g t h e M a s t e r D a t a . A f t e r u p d a t i n g t h e Ma s t e r D a t a , R O C s ha l l s e n d c o m p l i a n c e r e p o r t t o t h e R e g i s t r a r , N C L T w i t h i n a p e r i o d o f 3 0 d a y s ; x . T h e R e g i s t r y a n d L i q u i d a t o r a r e d i r e c t e d t o c o m mu n i c a t e a c o p y o f t h i s O r d e r t o t h e I n s o l v e n c y a n d B a n k r u p t c y B o a r d o f I n di a fo r t h e i r r e c o r d . 1 8 . A c c o r d in g l y , i n t e r m s o f a f o r e s a i d o rd e r I A - 2 7 16 / 2 0 2 1 i n ( I B ) - 1 6 4 7 ( N D ) 2 0 1 9 i s h e r e b y a l l o w e d . ” 7. T h u s, i t a p pe a r s t h at t h e N C LT h a s o r d e r e d l i qu ida t io n o f t he a s s e s se e - c o m p a n y u n de r t h e I B C , 2 0 1 6 . T he N C LT ha s a l s o ob s e r v e d t ha t t h e or de r o f m o r a t or i um pa s s e d u n d e r S e c t i on 14 o f th e In s ol v en c y a nd B a n kr up tc y C o de , 2 0 1 6 s h a l l c e a s e to h a v e i t s ef f e c t an d a fr e s h m or a t o r i um un de r S e c t io n 3 3 ( 5 ) o f t h e C od e sh a l l c om m en c e . T hi s be i n g t he p o s i ti o n , n o use f ul p ur p o se i s g oi n g t o be se r ve d i n c on ti n ui n g w i t h t h e p r e se n t pr o c e e di n g s. T h er e fo r e , t h i s a pp e a l n e ed s I.T.A. No.3536/Del/2018 4 t o b e c o ns i g ne d t o t h e r e c or d. N ot w i t h st a n d i n g th e a f o r e s a i d ob se r v a t i o n, i n t h e a b s en c e o f r e co r d s a n d m a t e r i a l be fo r e t he T r i bu na l , w e a r e i n no p o si t i on t o a d j u d i c a t e o n t he c o r r e c t n e s s o f t he f a c t ua l i s s ue s i n v o l v e d. 8. F o r su ch r e a s on s, t h e a pp e a l o f t h e Re v en u e i s di sm i s s e d w it h a l ib e r t y t o t h e R e ve nu e t o s e e k r e m e di a l m ea su r e s i n a c co r d a n c e w i t h l aw a s a n d w he n i t i s i n a p o s i t i o n t o j u st i f y t h e co nt i n u a n c e o f t h e pr oc e e di n g s or w h e r e it i s o t h e r w i s e n e c e s sa r y t o do so i n t h e i nt e r e s t of t he pa r t i e s. 9. I n t h e r e s ul t , t h e a p pe a l o f t h e Re ve n ue i s d i s mi s s e d i n l i m i ne fo r st a t i st i c a l pu r p o s e s . Order pronounced in the open Court on 15/06/2023 Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /06/2023 prabhat