Asian Colour Coated Ispat Ltd., Gurgaon V. DCIT, Central Circle- II , Faridabad

ITA 937/DEL/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 9591 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 03-08-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 142(1); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘A’, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SH. NARENDER KUMAR CHOUDHARY, JUDICIAL MEMBER ITA No. 937/Del/2021 (Assessment Year : 2011-12) Asian Colour Coated Ispat Ltd., NTH Complex, 4 th Floor, A-2, Shaheed Jeet Singh Marg, Qutub Institutional Area, New Delhi – 110 001 PAN No. AAFCA 1873 K Vs. DCIT Central Circle – II, Faridabad (APPELLANT) (RESPONDENT) Assessee by Shri Aman Garg, C.A. Revenue by Shri R. K. Gupta, CIT-D.R. Date of hearing: 22.09.2022 Date of Pronouncement: 30.09.2022 ORDER PER ANIL CHATURVEDI, AM: This appeal filed by the assessee is directed against the order dated 10.03.2021 passed by the Commissioner of Income Tax (Appeals)-3, Gurgaon relating to Assessment Year 2011-12. 2. Brief facts of the case as culled out from the material on record are as under:- 2 3. Assessee is a company stated to be engaged in the business of manufacturing of C. R. Strips. AO has noted that in the case of the assessee, the residential as well as office premises of the assessee Group of cases were subjected to search and seizure operations on 28.01.2011 and accordance with provision of Section 153A of the Act and notice dated 24.01.2012 u/s 142(1) of the Act was issued and served upon the assessee. Thereafter, the case of the assessee was taken up for scrutiny and assessment was framed vide order dated 28.03.2013 u/s 153B(1)(b) of the Act by making addition u/s 36(i)(iii) of the Act of Rs.21,15,60,072/-. 4. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 10.03.2021 in Appeal No.19F/2013-14 dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now in appeal before the Tribunal and has raised the following grounds. “1. On the facts and circumstances of the case, the order passed by the Learned CIT(A) is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, order passed by CIT(A) is illegal and bad in law and has been passed without having valid jurisdiction. 3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in passing the order ignoring the contention of the assessee that Corporate Insolvency resolution plan filed by JSW Steel Coated Product Ltd is approved by Hon’ble NCLT order dated 26 October 3 2020 under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 for the acquisition of the assessee company and consequently, all the tax dues of the company prior to the approval date of resolution plan shall stands ectinfuished and no consequential proceedings can be initiated or tax/penalty can be levied on the assessee for the said period. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in holding that the grounds of appeal taken by the assessee before him are premature and dismissed the appeal filed by the assessee. 5. (i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the action of the learned AO holding that the pre- operative interest of Rs.21,15,60,072/- capitalized by the assessee in Capital Work in Progress have not been incurred for business purposes and the same are not to be capitalized invoking section 36(1)(iii) of the Income Tax Act (ii) That the learned CIT(A) has erred both on facts and in law in holding that no depreciation would be allowable in subsequent years in respect of the above amount of interest capitalized by the assessee. (iii) That the learned CIT(A) has erred in confirming the action of the learned AO and ignoring the submissions and evidences brought on record by the assessee to substantiate that the advance given by the assessee are the business advance and as such no disallowance of interest under section 36(1)(iii) can be made. (iv) That the learned CIT(A) has erred in confirming the action of the learned AO and ignoring the submissions and evidences brought on record by the assessee to substantiate that the term loans have been utilized for the business purposes only and therefore no disallowance under section 36(1)(iii) can be made. 6. That the learned CIT(A) has erred in confirming the action of the learned AO ignoring the settled position of law that the 4 prudence of businessman which cannot be substituted by the Learned AO’s wisdom. 7. That the appellant craves leave to add, amend or alter any of the grounds of appeal.” 5. On the date of hearing, Learned AR submitted that Hon’ble National Company Law Tribunal (‘NCLT’) vide order dated 26.10.2020 in State Bank of India vs. Asian Colour Coated Ispat Ltd. (Company Application No.1393 of 2019), had approved the Resolution Plan submitted by JCW Steel Coated Products Ltd. for the acquisition of assessee in the recently concluded Corporate Insolvency Resolution Process (‘CIRP’) under the Insolvency and Bankruptcy Code, 2016 (‘IBC’). He submitted that by virtue of the NCLT order, all liabilities of assessee pertaining to any governmental dues related to a period prior to the approval of the Resolution Plan stand extinguished other than those expressly provided for in the Resolution Plan and the NCLT order. He further submitted that by virtue of the NCLT order, all pending proceedings in relation to or in connection with assessee will be deemed withdrawn or terminated and, thereby all the liabilities or obligations in relation thereto will be deemed to have been written off in full and permanently extinguished. He also placed on record the copy of the NCLT order and the relevant extract of the Resolution Plan for resolution of the assessee company. He, therefore, submitted that in view of the facts, necessary orders be passed by the Tribunal. 5 6. Learned DR did not controvert the submissions made by Learned AR. 7. We have heard the rival submissions and perused the material available on record. Before us, Learned AR has submitted that Hon’ble National Company Law Tribunal vide order dated 26.10.2020 has approved the Resolution Plan submitted by JSW Steel Coated Products Ltd. for the acquisition of the assessee company in the Corporate Insolvency Resolution Process (‘CIRP’) under the Insolvency and Bankruptcy Code, 2016. We find that Hon’ble Supreme Court in the case of Ghanashyam Mishra and Sons Pvt. Ltd. in Civil Appeal No.8129 of 2019 order dated 13 th April 2021 has held as under : “The question framed are as under: (i) That once a resolution plan is duly approved by the Adjudicating Authority under sub section (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 a part 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 owned to the Central Government, any State Government or 6 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 contined.” 8. The Hon’ble Apex Court at para 130 has further observed that 2019 amendment to Section 31 of I & B Code is clarificatory and declaratory operation in nature and, therefore, will have a retrospective operation. The relevant observation are as under: “130. In the foregoing paragraphs, we have held, that 2019 amendment to Section 31 of I&B Code is clarificatory and declaratory in nature and therefore will have a retrospective operation. As such, when the resolution plan is approved by NCLT, the claims, which are not part of the resolution plan, shall stand extinguished and the proceedings related thereto shall stand terminated.” 9. In view of the aforesaid facts, grounds of appeal filed by assessee are dismissed. 10. In the result, appeal of assessee is dismissed. Order pronounced in the open court on 30.09.2022 Sd/- Sd/- (NARENDER KUMAR CHOUDHARY) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Date:- 30.09.2022 PY* Copy forwarded to: 1. Appellant 2. Respondent 7 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI