M/S DEWAN HOUSING FINANCE CORPORATION LTD., MUMBAI V. DY CIT CC5(4), MUMBAI

ITA 595/MUM/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 4630 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 23-01-2020
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Bad and doubtful debts; Condonation of delay
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘D‘ BENCH MUMBAI BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA No.595/Mum/2020 (Asse ssment Year : 2015-16) M/s. Dewan Housing Finance Corporation Limited Warden House 2 nd Floor, Sir P.M.Road, Fort, Mumbai- 400 001 Vs. Dy. CIT, C.C. 5(4) Mumbai PAN/GIR No.AAACD1977A (Appellant) .. (Respondent) ITA No.302/Mum/2019 (Asse ssment Year : 2014-15) Dy. CIT, C.C. 5(4) Mumbai Vs. M/s. Dewan Housing Finance Corporation Limited Warden House 2 nd Floor, Sir P.M.Road, Fort, Mumbai- 400 001 PAN/GIR No.AAACD1977A (Appellant) .. (Respondent) Assessee by Shri Ronak Doshi Revenue by Smt. Mamta Bansal Date of Hearing 24/03/2022 Date of Pronouncement 31/03/2022 ITA No.595/Mum/2020 & 302/Mum/2019 M/s. Dewan Housing Finance Corporation Ltd., 2 आदेश / O R D E R PER M. BALAGANESH (A.M): ITA No.595/Mum/2020 – Asst Year 2015-16 – Assessee Appeal This appeal in ITA No.595/Mum/2020 for A.Y.2015-16 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-53, Mumbai in appeal No.CIT(A)-53/IT-41/DCCC-5(4)/2018-19 dated 22/11/2019 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 27/12/2017 by the ld. Dy. Commissioner of Income Tax Central Circle 5(4), Mumbai (hereinafter referred to as ld. AO). ITA No.302/Mum/2019 – Asst Year 2014-15 – Revenue Appeal This appeal in ITA No.302/Mum/2019 for A.Y.2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-53, Mumbai in appeal No.CIT(A)-53/IT-345/DCCC-5(4)/2016-17 dated 26/11/2018 (ld. CIT(A) in short) against the order of assessment passed u/s.143(3)of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 27/12/2016 by the ld. Dy. Commissioner of Income Tax Central Circle 5(4), Mumbai (hereinafter referred to as ld. AO). Both the appeals are taken up together and disposed of by this common order for the sake of convenience. 2. The assessee has raised the following grounds of appeal for A.Y.2015- 16:- 1. Non-condonation of delay in filing appeal before learned CIT(A) 2. Non-granting of reasonable opportunity of being heard. 3. Disallowance of upfront deduction of premium on issue of Zero coupon Bonds of Rs. 11,00,95,76,517/- and instead granting deduction on pro- rata basis of Rs.2,33,40,89,580/-. ITA No.595/Mum/2020 & 302/Mum/2019 M/s. Dewan Housing Finance Corporation Ltd., 3 2.1. The Revenue has raised the following grounds of appeal for the A.Y.2014-15:- i. "Whether on the facts and in the circumstances of the case and in law, the Id. CIT(A) erred in allowing the claim of bad debts of Rs. 24,99,56,891/- by the assessee by accepting the alternate contention of allowability u/s 37(1) of the Act overlooking the fact that the assessee itself has stated that it fulfills the conditions stipulated in Sec. 36(2) of the Act.?." ii. "Whether on the facts and in the circumstances of the case and in law, the Id. CIT (A) erred in law by according relief to the assessee without affording an opportunity of being heard to the AO while applying the provisions of Sec. 37(1) of the Act in the course of the appellate proceedings which is against the principles of natural justice.?” 3. We have heard the rival submissions and perused the materials available on record. We find at the outset that the ld. AR placed on record a copy of the order passed by the Hon‟ble National Company Law Tribunal (NCLT) dated 07/06/2021 wherein the assessee has been declared insolvent under the insolvency and bankruptcy code, 2016 and a resolution plan has been approved by the NCLT. 3.1. The ld. AR also placed on record the „Prayers and reliefs sought‟ by the applicant before the NCLT with regard to the income tax proceedings. He drew our attention to the tabulation of pending income tax proceedings before various forums included in caption “prayers and reliefs sought” filed before the NCL.T. In the said tabulation the present appellate proceedings before this Tribunal were duly mentioned. We find that the NCLT in its order dated 07/06/2021 had ultimately after taking cognizance of all the prayers and reliefs sought and after hearing all the parties concerned, had accepted the proposal of the new management i.e. M/s. Piramal Capital and Housing Finance Ltd., to take over the company from erstwhile management of Dewan Housing Finance Pvt. Ltd., As per the resolution plan, the applicant prayed to be relieved of all ITA No.595/Mum/2020 & 302/Mum/2019 M/s. Dewan Housing Finance Corporation Ltd., 4 the pending proceedings against the corporate debtor and the dues payable by it. Prayer and reliefs sought specifically stated that the impugned appeals pending before this Tribunal shall stand closed. This resolution plan was duly approved by the NCLT in its order dated 07/06/2021 wherein it was held as under:- "(ii) The approval of the Resolution Plan shall not be construed as waiver of any statutory obligations/liabilities of the Corporate Debtor and shall be dealt by the appropriate Authorities in accordance with law. Any waiver sought in the Resolution Plan, shall be subject to approval by the Authorities concerned in the light of the decision of Hon'ble Supreme Court in the matter of Ghanshyam Mishra and sons vs. Edelweiss Asset Reconstruction Company Limited. a. As prayed by the Resolution Applicant, since approx. 80% of workforce is from the sister concern of DHFL namely DHFL Sale and Services Ltd (DSSL), we direct DSSL to continue to provide manpower sendees to the Corporate Debtor as per the existing terms and conditions at/east for a year or till the expiry of the contract period which ever is later and notice period for termination should be at/east 6 months by either side. b. It is also to be noted that while granting NoC by RBI, the status of the Corporate Debtor is changed from Deposit taking Housing Finance Company to Non Deposit taking Housing Finance Company. c. Reverse merger of the Successful Resolution Applicant Piramal Capital & Housing Finance Limited into and with DHFL, the Corporate Debtor is prima facie approved by this Adjudicating Authority. " 3.2. This order of NCLT was subjected to further appeal before the Hon‟ble National Company Law Appellate Tribunal, New Delhi (NCLAT). We find that the NCLAT vide its order dated 12/07/2021 had slightly modified the directions of the Hon‟ble NCLT by observing as under:- "5. With consent of Counsel for both sides, we have taken up this Appeal for final disposal, and heard them. 6. Having going through the impugned direction and going through the judgment in the matter of 'Ghanshyam Mishra and Sons Pvt. Ltd. vs. Edelweiss Asset Reconstruction Company Limited. & Ors.', we find that there is some confusion in this Para (ii) which has been passed by the Adjudicating Authority. It would be appropriate to reproduce Para 95 from the Judgment of 'Ghanshyam Mishra', where the Hon'ble Supreme Court dealt with various questions and answered the same as under: ITA No.595/Mum/2020 & 302/Mum/2019 M/s. Dewan Housing Finance Corporation Ltd., 5 "95. In the result, we answer the questions framed by us as under; (i) That once a resolution plan is duly approved by the Adjudicating Authority under subsection (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the Corporate Debtor and its employees, members, creditors, including the Central Government any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the Adjudicating Authority, all such claims, which are not apart of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan; (ii) 2019 amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which I&B Code has come into effect; (iii) Consequently all the dues including the statutory dues owed to the Central Government, any State Government 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 under Section 31 could be continued. " 7. (A) In view of the above, we direct that in place of the above impugned Para (ii) in the impugned order, the direction shall be: 'All the dues including the statutory dues owed to the Central Government, any State Government 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 the Adjudicating Authority was granting its approval under Section 31 could be continued.' (B) We substitute this direction in place of Para (ii) of the Operative Order of impugned order. " 3.3. Thus, on conjoint reading of the resolution plan, orders of NCLT and NCLAT, it is evident that all the prayers forming part of the resolution plan were allowed which admittedly included the impugned appeals pending before this Tribunal and apart from this, any other statutory dues even if not forming part of the resolution plan shall also stand extinguished. ITA No.595/Mum/2020 & 302/Mum/2019 M/s. Dewan Housing Finance Corporation Ltd., 6 3.4. We find that the ld. DR had placed reliance on the report submitted by the ACIT, Central Circle 5(4), Mumbai (in short the ld. AO) while making arguments. In the said report, the ld. AO had stated that the order of NCLT does not imply any bar on assessment / appellate proceedings. According to ld AO, it only bars the recovery proceedings. He also stated that there is no provision in the Income Tax Act, which enables to drop the assessment/ appellate proceedings after receipt of the orders of NCLT approving the resolution plan read with order of NCLAT under IBC 2016. Accordingly, the ld. DR concluded that the present appellate proceedings could be continued inspite of the orders of NCLT and NCLAT. 3.5. We find that the entire corporate insolvency resolution process of assessee company has been concluded by virtue of NCLT order dated 07/06/2021 approving the resolution plan. Hence, respectfully following the decision of the Hon‟ble Supreme Court in the case of Ghanashyam Mishra and Sons Pvt. Ltd., vs. Edelwess Asset Reconstruction Company Limited reported in 126 taxmann.com 132 (SC), wherein it was held that once a resolution plan was duly approved by NCLT u/s.31 of the IBC, the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, the members, creditors including the Central Government, any State Government or any local authority (emphasis supplied by us) . The Hon‟ble Supreme Court also held that on the date of approval of resolution plan, all such claims which are not a part of the resolution plan shall automatically stand extinguished. 3.6. Hence, in view of the above we are unable to accept to the contentions of the ld. DR and accordingly hold that the present proceedings could not be continued. Accordingly, appeal of the assessee ITA No.595/Mum/2020 & 302/Mum/2019 M/s. Dewan Housing Finance Corporation Ltd., 7 for A.Y.2015-16 is hereby dismissed and appeal of the Revenue for A.Y.2014-15 is hereby dismissed. 4. In the result, appeal of the assessee for A.Y.2015-16 is dismissed and appeal of the Revenue for A.Y.2014-15 is dismissed. Order pronounced on 31/03/2022 by way of proper mentioning in the notice board. Sd/- (KULDIP SINGH) Sd/- (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 31/03/2022 KARUNA, sr.ps Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumba 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy//