TMI Blog2020 (7) TMI 501X X X X Extracts X X X X X X X X Extracts X X X X ..... rily added back this sum in the return of income under normal provisions of the Act - HELD THAT:- We find from the computation of income for the year under consideration that even without adding these bad debts of ₹ 2.27 Crores in the profit and loss account of the assessee, the assessee would not fall within the ambit of provisions of Section 115JB in view of loss - as rightly pointed out by the ld. AO in his order that this would certainly have an impact in the carry forward of book loss which need to be reduced while computing the book profits u/s.115JB in future years. But at the same time, we find that this is not an item that could be added back as per the list of items required to be added back pursuant to Explanation to Section 115JB(2) - It is not the case of the revenue that this claim of bad debt of ₹ 2.27 Crores is ingenuine or is not emanating from the business of the assessee company. As in the case of Apollo Tyres Ltd., [ 2002 (5) TMI 5 - SUPREME COURT] had categorically held that the ld. AO is not empowered to disturb the net profit as per profit and loss account which has been prepared in accordance with part II and part III of schedule-VI of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... February 2011, the assessee company purchased S. J. Green Parks Pvt. Ltd., which had valid PPA under phase-2 and Euro Solar Power Pvt. Ltd., which had valid PPA under phase-1. The assessee purchased entire shareholdings of both the companies in February 2011. However, the assessee company could not get sufficient financing from the banks and hence, the project could not be started before the stipulated date. For this purpose, the assessee company had to pay heavy penalties and fearing complete losses, the assessee company in February 2012 sold the shares of the aforesaid two companies as under:- (a) Total sale of shares of S J Green Parks Ltd., to Madhav Power Pvt. Ltd., - Baroda (b) 50% stake sale of Euro Solar Power Pvt. Ltd to Madhav Power Pvt. Ltd. Baroda 2.2. With the support of Madhav Power Pvt. Ltd., Baroda, Euro Solar Power Pvt. Ltd successfully commissioned 5 MW power plant in December 2012. It is pertinent to note that at the time of purchase of shares of Euro Solar Power Pvt. Ltd., (ESPL) by the assessee, ESPL had 140 acres of non-NA land in Kutch, Gujarat. The assessee company paid purchase consideration of ₹ 4.25 Crores for acquiring 100% stake in ES ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is done. The assessee derived capital gains on sale of this land to the tune of ₹ 3,20,33,576/- which was duly offered for taxation under the head capital gains. 2.4. The land NA could not be done by assessee within reasonable time. Accordingly, being the aggrieved party, purchaser Mrs. Neelakshi Khurana cancelled the transaction in May 2014 on account of assessee company selling this entire stake in ESPL to Madhav Group. The amount received from Mrs. Neelakshi Khurana by the assessee was refunded. Hence, it was submitted that the capital gains on sale of land ₹ 3.20 Crores offered by the assessee in A.Y.2012-13 actually did not finally materialise. The ld. AR submitted that though these are subsequent events, which happened after the A.Y.2012-13, till the assessee did not press for revision of income already offered for taxation. 2.5. The ld. AR also submitted that the following documents were filed before the ld. AO:- (a) Memorandum of Understanding (MOU) dated 28/03/2011 of shareholders agreement dated 26/08/2011 between the shareholders for purchase of 100% shares by the assessee company in ESPL. (b) Shareholders agreement for sale dated 21/02/2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee with ESPL are to be understood as under:- (a) Madhav Group to acquire 50% stake from assessee company in ESPL (b) ESPL to retain only land required to 5 MW solar power project (i.e. 35 acres). Balance land of 105 acres transferred to assessee company by ESPL. (c) Madhav Group Mrs. Neelakshi Khurana purchased 42 acres of land from assessee company at a price of ₹ 4 Crores which includes cost of NA permission which is the responsibility of assessee company. 2.9. It was submitted that all the above were transactions with assessee company as seller and Madhav Group as purchaser. All the agreements entered into with regard to the aforesaid transactions were submitted before the ld. AO vide letter dated 19/03/2015. It was submitted by the ld. AR that the agreement of Banakhat without possession was executed on 24/02/2012 and not on 24/12/2012 as submitted by the ld. AO and hence the premise for disallowing the loss on sale of shares on the ground that the land was sold much after the sale of shares is factually incorrect. The ld. AR also submitted that following dates would be relevant for understanding the transactions better. (a) Shareholders agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee had reflected certain bad debts on certain receivables which were carried forward from earlier years. To get rid of possible litigation that might arise on the allowability of the said issue as deduction, it had chosen not to claim any deduction towards bad debts while filing its return of income. The bad debts arose in respect of debts receivable from the following parties as under:- (a) Barayu / Golden Rose - ₹ 2,15,22,719/- (b) Excavator Ethopia - ₹ 7,40,000/- (c) Saffron Advisors - ₹ 5,00,000/- Total ₹ 2,27,62,719/- 3.2. We find that the ld. AO had duly recorded the fact that assessee had voluntarily added back this sum of ₹ 2,27,62,719/- in the return of income under normal provisions of the Act. We find that the ld. AO had observed that this very action of the assessee in voluntarily disallowing the said sum would also result in increasing the book loss before tax which would in turn have impact on the computation of book profits u/s.115JB of the Act in the form of carry forward o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance on the decision of co-ordinate bench of this Tribunal in the case of JSW Ltd in ITA Nos. 6264 6103/Mum/2018 dated 14.5.2020, wherein this issue has been addressed in detail allowing time to pronounce the order beyond 90 days from the date of conclusion of hearing by excluding the days for which the lockdown announced by the Government was in force. The relevant observations of this tribunal in the said binding precedent are as under:- 7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 7th January 2020, this order thereon is being pronounced today on 14th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners :- (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ckdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon‟ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stem. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon‟ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon‟ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made time- bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suo motu by Hon‟ble jurisdictional High Court and Hon‟ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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