2022 (2) TMI 1365 - AT - Income Tax

Revenue's Appeal Dismissed for Speculation Loss Set-off Disallowance in Liquidation Case

DCIT, Cir. 4 Ahmedabad Versus Elephant Enterprises (In Liquidation)

The Revenue's appeal against the disallowance of set off of speculation loss for the assessment year 2008-09 was dismissed by the Tribunal. The Tribunal ... Assessment against company wound up - Disallowance of set off of speculation loss from the current years speculation business income - assessee company is under liquidation and hence notice was served to the Official Liquidator (“OL”) attached with Hon’ble High Court of Gujarat - HELD THAT:- In this case, the liquidator has given notice to the Income Tax Department as early as 5.12.2018, but IT Department has not seemed to have given pendency of the above cases before the OL. In accordance with Rule 26 of the ITAT Rules, appeal is not maintainable as income-tax department has not given full details to the OL [Official Liquidator] appointed by the Hon’ble High Court. The fact is that the company having been wound up, and Official Liquidator appointed by the Hon’ble High Court has discharged and relieved as OL, the assessee-company as such does not legally exist in the eyes of law. We draw support of the judgment of Maruti Suzuki India Ltd. [2019 (7) TMI 1449 - SUPREME COURT] where it was held that during pendency of assessment proceedings, assessee company was amalgamated with another company and thereby lost its existence, assessment order passed subsequently in name of said non-existing entity, would be without jurisdiction and was to be set aside. Thus the appeal filed by the Revenue is not maintainable as against the respondent-company which is dissolved by order of the High Court of Gujarat Issues:1. Disallowance of set off of speculation loss2. Maintainability of appeal and cross objection post liquidationAnalysis:1. The appeal was filed by the Revenue against the order of the Ld. Commissioner of Income-tax (Appeals) relating to the assessment year 2008-09. The Revenue contended that the Ld.CIT(A) erred in law by deleting the disallowance of set off of speculation loss from the current year's speculation business income without proper appreciation of facts. The Tribunal noted that the assessee company was under liquidation, and the Official Liquidator informed that the company had been ordered to be dissolved by the High Court. Despite multiple hearings and lack of representation from the Revenue or Official Liquidator, the Tribunal examined the facts and relevant court orders. The Tribunal observed that the Income Tax Department had demanded an outstanding amount but failed to provide details regarding the assessment year or the basis of the demand. Citing Rule 26 of ITAT Rules and judicial precedents, the Tribunal concluded that the appeal by the Revenue was not maintainable as the company had been dissolved by the High Court, and the Official Liquidator was discharged. Therefore, the appeal was dismissed.2. Regarding the maintainability of the cross objection filed by the assessee, the Tribunal found it equally not maintainable. The Tribunal highlighted that as per the ITAT Rules, the assessee was required to modify the name of the appeal in Form No.36, which was not done in this case. Consequently, the cross objection was also dismissed. In the final decision, both the appeal of the Revenue and the cross objection of the assessee were dismissed by the Tribunal. The judgment was pronounced on 28th February 2022 at Ahmedabad.