Appeal Dismissed: Trading Loss Disallowed due to Company Dissolution for AY 2015-16

The Tribunal dismissed the appeal against the disallowance of trading loss in shares for the assessment year 2015-16. The company, which was ordered to be liquidated and dissolved, became non-existent with no assets for distribution. The Tribunal held that as per a Supreme Court judgment, claims not part of the resolution plan approved by the Adjudicating Authority are extinguished. Since the company was dissolved, the Income Tax Department's claim for the assessment year 2015-16 was unenforceable, making the appeal infructuous. The Tribunal emphasized the overriding effect of the Insolvency and Bankruptcy Code on the Income Tax Act.

---

---

Issues involved:
1. Disallowance of trading loss in shares.

Detailed Analysis:
1. The appeal was filed against the order confirming the disallowance of Rs. 1,13,65,136 on account of loss from trading in shares for the assessment year 2015-16.
2. The assessee, a company trading in shares, declared a loss in the income tax return for the year. The assessing officer added the amount under section 68 of the Income Tax Act as unexplained cash and income. The Commissioner of Income Tax (Appeals) upheld the addition, leading to the appeal before the Tribunal.
3. The former Liquidator of the assessee informed the Tribunal that the company was ordered to be liquidated and dissolved by the National Company Law Tribunal. The company became non-existent with no assets available for distribution. The Income Tax Department did not raise any claims despite being informed.
4. The Tribunal noted the chronological events related to the company's insolvency and dissolution, including orders from the National Company Law Tribunal and intimation to the Income Tax Officer.
5. The Tribunal deliberated on the maintainability of the appeal by the non-existent company and the enforceability of the tax demand. Citing a Supreme Court judgment, it held that claims not part of the resolution plan approved by the Adjudicating Authority stand extinguished. As the company was dissolved, the Income Tax Department's claim related to the assessment year 2015-16 was extinguished.
6. Consequently, the Tribunal found the proceedings and the appeal infructuous, dismissing the same as the company was non-existent, and the claim by the Revenue was not recoverable due to the overriding effect of the Insolvency and Bankruptcy Code on the Income Tax Act.

This detailed analysis covers the issues involved in the legal judgment comprehensively, focusing on the disallowance of trading loss in shares and the implications of the company's dissolution on the tax demand.

---