DCIT, CIRCLE- 17(1), NEW DELHI V. MONNET ISPAT & ENERGY LTD., NEW DELHI

ITA 6962/DEL/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7568 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 21-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Liquidation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: E NEW DELHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI AMARJEET SINGH, JUDICIAL MEMBER [THROUGH VIDEO CONFERENCING] ITA NO.6961/DEL/2017 ASSESSMENT YEAR: 2005-06 AND ITA NO.6962/DEL/2017 ASSESSMENT YEAR: 2006-07 AND ITA NO.6963/DEL/2017 ASSESSMENT YEAR: 2007-08 DCIT, CIRCLE-17(1), NEW DELHI VS. M/S. MONNET ISPAT & ENERGY LTD., 11, MASJID MOTH, GREATER KAILASH, PART-II, NEW DELHI PAN : AAACM0501D (APPELLANT) (RESPONDENT) ORDER PER O.P. KANT, AM: THESE THREE APPEALS FILED BY THE REVENUE ARE DIREC TED AGAINST RESPECTIVE ORDERS DATED 30/06/2017; 30/06/2 017 AND APPELLANT BY SH. GAURAV PUNDIR, SR.DR RESPONDENT BY SH. V.K. JAIN, CA SH. VIKAS SINGH, CA DATE OF HEARING 26.08.2021 DATE OF PRONOUNCEMENT 27.08.2021 2 ITA NO.6961, 6962 & 6963/DEL./2017 14/07/2017 PASSED BY THE LEARNED COMMISSIONER OF IN COME-TAX (APPEALS)-2, NEW DELHI [IN SHORT THE LD. CIT(A)] FOR ASSESSMENT YEARS 2005-06, 2006-07 AND 2007-08 RESPECTIVELY. BE ING IDENTICAL ISSUES INVOLVED IN ALL THESE APPEALS, THESE APPEALS WERE HEARD TOGETHER AND DISPOSED OFF BY WAY OF THIS CONSOLIDAT ED ORDER FOR THE SAKE OF CONVENIENCE. 2. AT THE OUTSET, THE LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT IN THE CASE OF THE COMPANY RESOLUTION ORDER HA S BEEN PASSED BY THE HONBLE NATIONAL COMPANY LAW TRIBUNAL UNDER INSOLVENCY AND BANKRUPTCY CODE, 2016 AND HELD THAT DEMANDS OF ANY PAYABLE TO CENTRAL GOVERNMENT WILL BE DEEMED TO BE PERMANENTLY EXTINGUISHED. HE FURTHER SUBMITTED THAT TRIBUNAL E BENCH, NEW DELHI IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YE AR 2013-14 HAS DISMISSED THE APPEAL OF THE REVENUE ON SAME REASONI NG. 3. THE LEARNED DR COULD NOT CONTROVERT THE ABOVE FACT UAL FINDING. 4. WE HAVE HEARD RIVAL SUBMISSION OF THE PARTIES AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT TRIBU NAL IN THE CASE OF THE ASSESSEE IN ITA NO. 173/DEL/2018 FOR ASSESSM ENT YEAR 2013-14, DISMISSED THE APPEAL OF THE REVENUE. THE F ACTUAL OBSERVATIONS MADE BY THE TRIBUNAL (SUPRA) ARE REPRO DUCED AS UNDER: 2. AT THE OUTSET, IT IS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE DEFAULTED IN REPAYMENT OF OUTSTANDING SECU RED LOANS TO VARIOUS CREDITORS, AND ON THE APPLICATION OF STATE BANK OF INDIA, ONE OF THE SECURED FINANCIAL CREDITORS OF THE COMPANY, HON'BLE NCLT ADMITTED THE PETITION U/S. 7 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 ('IBC'), DECLARED MORATORIUM AND FINALLY PASSE D FINAL ORDER U/S. 31 OF THE IBC ON 24 07 2018, APPROVING THE RES OLUTION PLAN FILED BY THE SUCCESSFUL RESOLUTION APPLICANT. IN THAT PRO CESS, THE NCLT OBSERVED THAT THE RESOLUTION PROFESSIONAL DETERMINE D THE LIQUIDATION VALUE OF THE COMPANY AS RS.23,56,35,25,186/- WHEREA S THE TOTAL 3 ITA NO.6961, 6962 & 6963/DEL./2017 AMOUNT OF ADMITTED SECURED FINANCIAL CREDITORS IS R S.9772 CRORES AND THE ADMITTED CLAIMS OF THE UNSECURED FINANCIAL CREDITORS IS RS.1243 CRORES, PUT TOGETHER RS.1,14,78,09,50,325/- , AND BY THIS DIFFERENCE, THE LIQUIDATION VALUE OF THE ASSETS OF THE ASSESSEE IS NOT EVEN SUFFICIENT TO SATISFY THE ADMITTED CLAIM OF TH E SECURED FINANCIAL CREDITORS IN FULL AND, THEREFORE, THE LIQUIDATION V ALUE DUE TO THE UNSECURED FINANCIAL CREDITORS, OPERATIONAL CREDITOR S AND OTHER CREDITORS OF THE ASSESSEE AS PER WATERFALL MECHANIS M MENTIONED UNDER SECTION 53 OF THE CODE IS NIL. IT WAS FURTHER OBSERVED THAT IN RESPECT OF THE TREATMENT OF OTHER CREDITORS, THIS A PPROVED RESOLUTION PLAN DISCLOSES THAT ALL OTHER LIABILITIES AND OBLIG ATIONS OF THE ASSESSEE ARE BEING EXTINGUISHED IN FULL AND ALL LIT IGATIONS AND PROCEEDINGS IN RESPECT TO DEBTS PENDING AGAINST THE ASSESSEE PRIOR TO COMMENCEMENT OF CIRP SHALL STAND ABATED AS THE L IQUIDATION VALUE DUE TO THOSE CREDITORS, AS PER THE WATERFALL MECHANISM IN SECTION 53 OF THE CODE IS NIL. 4.1 FURTHER, THE TRIBUNAL IN THE BACKGROUND OF THE ABO VE FACTS, HELD AS UNDER: 5. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF SUBMISSIONS MADE ON EITHER SIDE. DUES TO THE INCOME-TAX DEPARTM ENT ARE REFLECTED IN LIST - 8 APPENDED TO THE ORDER DATED 2 4.07.2018 PASSED BY THE NCLT. BY SUCH ORDER, NCLT OBSERVED THAT THER E IS A HUGE DIFFERENCE IN THE TOTAL AMOUNT OF ADMITTED SECURED FINANCIAL CREDITORS WHICH IS TO THE TUNE OF RS 1,14,78,09,50,325/- AND THE LIQUIDATION VALUE OF THE COMPANY TO THE TUNE OF RS.23,S6,35,25, 186/- AND THEREFORE, BY APPLICATION OF THE WATERFALL MECHANIS M MENTIONED IN SECTION 53 OF THE CODE, THE LIQUIDATION VALUE DUE T O UNSECURED FINANCIAL CREDITORS, OPERATIONAL CREDITORS AND OTHE R CREDITORS OF THE ASSESSOE BECOMES NIL. IT IS CLEAR THAT IN TERMS OF THE RESOLUTION PLAN AS APPROVED BY THE NCLT, ALL CLAIMS OR DEMANDS OR L IABILITIES OR OBLIGATIONS OWED OR PAYABLE TO OR ASSESSED BY OR AS SESSABLE BY THE CENTRAL GOVERNMENT/STATE GOVERNMENT IN RELATION TO ANY PERIOD PRIOR TO THE ACQUISITION, WILL BE WRITTEN OFF IN FU LL AND WILL BE DEEMED TO BE PERMANENTLY EXTINGUISHED THIS POSITION OF LAW IS CLEAR IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CAS E OF GHANUSHYAM MISHARA AND SONS VS. EDIEWEISS ASSETS RECONSTRUCTIO N COMPANY LTD, (CIVIL APPEAL NO.8129/2019 - ORDER DATED 13/04 /2021). 6. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE DUES TO THE INCOME-TAX DEPARTMENT FOR THE ASSES SMENT YEAR 2013-14, WHICH ARE REFLECTED IN THE LIST-B APPENDED TO NCLT ORDER STOOD FULLY EXTINGUISHED AND NO USEFUL PURPOSE WOUL D BE SERVED BY ADJUDICATING THIS MATTER. WITH THIS VIEW OF THE MAT TER, WE DISMISS THE APPEAL OF THE REVENUE. 4 ITA NO.6961, 6962 & 6963/DEL./2017 4.2 RESPECTFULLY, FOLLOWING THE FINDINGS OF THE TRIBUN AL (SUPRA), THE INSTANT APPEALS OF THE REVENUE ARE DISMISSED AS NO USEFUL PURPOSE WOULD BE SERVED BY ADJUDICATING THE MATTER INVOLVED IN APPEALS AS DUES OF THE INCOME TAX DEPARTMENT STANDS PERMANENTLY EXTINGUISHED. 5. IN THE RESULT, ALL THE THREE APPEALS OF THE REVENU E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2021. SD/- SD/- (AMARJEET SINGH) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27 TH AUGUST, 2021. RK/- (DTDC) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI