JSW Steel Coated Products Ltd. Vs DCIT (ITAT Mumbai)
IBC Resolution Doesn’t Extinguish Statutory Loss Carry-Forward: ITAT Mumbai Restores Claim of ₹3,926 Cr Business Losses to AO
The Mumbai ITAT “F” Bench allowed the appeal of JSW Steel Coated Products Ltd. (successor of Asian Colour Coated Ispat Ltd.) in ITA No. 3407/Mum/2025 for AY 2021-22, holding that carry-forward of business losses cannot be denied merely by treating the appeal as infructuous on account of an IBC resolution plan, and remitted the matter to the Jurisdictional AO to examine and allow the claim in accordance with law
The assessee’s return was processed u/s 143(1), and while rectification u/s 154 granted set-off of brought-forward losses and unabsorbed depreciation, the CPC denied carry-forward of business losses aggregating to ₹39,26,81,14,808 for AYs 2016-17 to 2018-19 on the ground that returns were allegedly not filed within the due date. The CIT(A) dismissed the appeal as infructuous, holding that approval of the IBC resolution plan extinguished pre-resolution tax entitlements unless expressly preserved.
The Tribunal rejected this approach. Relying on Section 79 (third proviso) and the NCLAT’s ruling in the assessee’s own insolvency proceedings, the ITAT held that IBC does not bar carry-forward of losses per se; rather, the tax claim must be examined independently under the Income-tax Act after affording opportunity to the Department. The NCLAT had already clarified that observations denying carry-forward of losses in the resolution approval deserved deletion and that eligibility must be determined u/s 79.
The ITAT noted that the assessee had placed on record details evidencing timely filing of returns u/s 139(1) for the relevant years and that there was no dispute on principle regarding eligibility. Consequently, the matter was remitted to the JAO to verify the factual compliance and grant carry-forward of business losses for AYs 2016-17, 2017-18 and 2018-19 in accordance with law.
Accordingly, the appeal was allowed for statistical purposes, reaffirming that IBC resolution does not automatically wipe out statutory rights to carry forward losses, which must be adjudicated under the Income-tax Act
FULL TEXT OF THE ORDER OF ITAT MUMBAI
