ACIT, New Delhi V. M/s. Bhushan Energy Ltd., New Delhi

ITA 5429/DEL/2015

AI Insights

The case involves an appeal by the Assistant Commissioner of Income-Tax against M/s Bhushan Energy Ltd., concerning the deletion of an addition of Rs.2,56,60,607 to the assessee's income, which was initially treated as bogus expenses. The Income Tax Appellate Tribunal, Delhi, heard the case following the assessee's resolution under the Insolvency and Bankruptcy Code, 2016. The Tribunal considered the implications of the approved Resolution Plan, which included provisions that all claims against the company for the period prior to the plan's approval would be extinguished. The Tribunal concluded that, given the binding nature of the Resolution Plan under the IBC, the Revenue's appeal did not survive.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 108638 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-04-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 03-09-2015
• Laws Referred To: Income Tax Act, Insolvency and Bankruptcy Code, 2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 115JB

Judgement Text

1 ITA No. 5429/Del/2015 & CO 159/Del/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A”: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA No. 5429/DEL/2015 Assessment Year: 2010-11 ACIT, Central Circle-3, New Delhi. Vs M/s Bhushan Energy Ltd., 7 th Floor, Bhushan Centre, Hayat Regency Complex, Bhikaji Kama Place, New Delhi-110066. PAN:AACCB7445H APPELLANT RESPONDENT AND C.O. No. 159/Del/2019 (Arising out of ITA No. 5429/DEL/2015) Assessment Year: 2010-11 M/s Bhushan Energy Ltd., 7 th Floor, Bhushan Centre, Hayat Regency Complex, Bhikaji Kama Place, New Delhi-110066. PAN:AACCB7445H Vs ACIT, Central Circle-3, New Delhi. Cross Objector RESPONDENT 2 ITA No. 5429/Del/2015 & CO 159/Del/2019 Assessee represented by Sh. Ashwani Kumar, CA Department represented by Sh. P. Praveen Sidharth, CIT DR Date of hearing 12.04.2023 Date of pronouncement 17.04.2023 O R D E R PER KUL BHARAT, JM: The captioned appeal by the Revenue and the cross-objection by the assessee are directed against the order of the learned Commissioner of Income-tax (Appeals)-23, New Delhi dated 02.06.2015, pertaining to the assessment year 2010-11. 2. The Revenue has raised following grounds of appeal: “1. The order of Ld. CIT (A) is not correct in law and on facts. 2. On the facts and circumstances of the case, the CIT(A) has erred in law in deleting the addition of Rs.2,56,60,607/- on account of placement charges paid to M/s Elegant Securities Services Pvt. Ltd., M/s Dependable Transport Pvt. Ltd., M/s Terrific Steel Pvt. Ltd. and M/s Stylish Construction (P) Ltd. on account of bogus expenses booked / incurred by the assessee company which remains unexplained by the assessee company. 3. On the facts and circumstances of the case, the CIT(A) has erred in law in deleting the addition of Rs. 2,56,60,607/- on account of placement charges paid to M/s Elegant Securities Services Pvt. Ltd., M/s Dependable Transport Pvt. Ltd., M/s Terrific Steel Pvt. Ltd. and M/s Stylish Construction (P) Ltd. to the book profits computed u/s 115JB of the Act for computation of MAT liability on account of bogus expenses booked / incurred by the assessee company which remains unexplained by the 3 ITA No. 5429/Del/2015 & CO 159/Del/2019 assessee company. 4. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal 3. The assessee has raised following grounds of cross-objection: “1. That the appeal filed by the Ld. Assistant Commissioner of Income- Tax, Central Circle-3, New Delhi deserves to be dismissed in as much as the same is in contravention to the approved Resolution Plan, and the provisions of Insolvency and Bankruptcy Code, 2016(“IBC”) since a) the Income tax department is an operational creditor as defined under the provisions of the IBC and the alleged amount assessed to be due and payable by the Company is in nature of operational debt also defined under the provisions of the IBC whereby the said approved Resolution Plan is binding on the Income tax department also. (b) the Income tax department having filed its claim under Form B before the RP is now bound by the CIRP process and the outcome of the same. The Income tax department now cannot severe itself from the said CIRP of the Company. 2. That the appeal filed by the Ld. Assistant Commissioner of Income-Tax, Central Circle-3, New Delhi deserves to be dismissed in as much as much as the same has been passed ignoring the provisions of the Approved Resolution Plan and Insolvency and Bankruptcy Code, 2016 which have overriding effect on all other laws inconsistent to it vide section 238 thereof and whereby all liabilities, including the impugned demand stands also extinguished in terms of the approved resolution plan and all demands, save and except as mentioned in approved resolution plan, relating to period prior to approval of Resolution Plan i.e May 30, 2019 stand extinguished and abated.” 4 ITA No. 5429/Del/2015 & CO 159/Del/2019 4. At the outset learned counsel for the assessee submitted that the assessee company has undergone proceedings under Insolvency and Bankruptcy Code, 2016 and the learned National Company Law Tribunal vide order dated 30.05.2019 has admitted the Company Co-Resolution Process. It is further submitted that the Resolution Plan has been finalized. The learned counsel for the assessee drew our attention to the relevant contents of the Resolution Plan at page no. 128 of the Paper Book-2, (internal page 67 of the Resolution Plan). For the sake of clarity, the same is reproduced as under: “(ii) Any and all legal proceedings (including any notice, show cause, adjudication proceedings, assessment proceedings, regulatory orders, etc.) initiated before any forum by or on behalf of any Operational Creditor (whether under Annexures 8, 9, 10, 11 or otherwise and including Governmental Authorities) or any Other Creditors to enforce any rights or claims against the Company shall immediately, irrevocably and unconditionally stand withdrawn, abated, settled and/or extinguished, and the Operational creditors and Other Creditors shall take all necessary steps to ensure the same. Except to the extent of the Operational Creditors Settlement Amount payable to the relevant Operational Creditors in accordance with the terms of Section 8.2.1 the Operational Creditors of the Company (whether under Annexures 8, 9, 10, 11 or otherwise, and including Governmental Authorities) and Other Creditors shall have no further rights or claims against the Company (including but not limited to, I relation to any part breaches by the Company), in respect of the period prior to the Closing Date, and all such claims shall immediately, irrevocably and unconditionally stand extinguished.” 5. Learned DR could not rebut this. 6. In view of the judgment of the learned National Company Law Tribunal, 5 ITA No. 5429/Del/2015 & CO 159/Del/2019 whereby the Resolution Plan has been accepted, the present proceedings filed by the parties would not survive. 7. In the result, appeal of the Revenue and the cross-objection of the assessee stand dismissed. Order pronounced in open court during the course of hearing on 17 th April, 2023. Sd/- Sd/- ( M. BALAGANESH ) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI