IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES “G”, MUMBAI Before Justice (Retd.) C V Bhadang, Hon’ble President &

Ms. Padmavathy S, Hon’ble Accountant Member ITA No. 4649/Mum/2018 (Assessment Year : 2012-13)

Supertex Industries Ltd., DCIT Circle 4(3)(2), 45-49 Babu Genu Road, Mumbai.

Vs.

Princess Street, Kalbadevi, Mumbai 400 002. PAN AAACS7274D (Appellant) (Respondent)

Appellant By : Shri Dharan Gandhi Respondent By : Shri Swapnil Choudhary-Sr AR Date of Hearing : 20.08.2025 Date of Pronouncement: 22.10.2025 O R D E R Per Justice (Retd.) C V Bhadang, President:

By this appeal the assessee is challenging the order dated 07.05.2018 passed by the CIT(A)-9, Mumbai, [CIT(A) for short] by which the assessment order passed by the Assessing Officer (AO) u/s. 143(3) r.w.s. 147 of the Act has been confirmed. By order dated 09.03.2015, the Assessing Officer has computed the book profits of the assessee u/s. 115JB at Rs. 10,46,418/- and has levied tax accordingly. The appeal pertains to A.Y. 2012-13.

2. The brief facts are that the assessee is in the business of manufacture, processing, trading, export and import of polyester and synthetic yarns and trading in fabrics. The assessee was declared as a sick undertaking by Board for Industrial and Financial Reconstruction (BIFR) on 09.02.2005 and State Bank of India was appointed as Operating Agency to formulate a revival scheme. The scheme of revival of the assessee company was sanctioned by BIFR vide order dated 08.09.2008 (SS-08). Subsequently, the net worth of company became positive as per Audited Balance Sheet (ABS) as on 31.03.2009 and provisional balance sheet as on 30.03.2010. In such circumstances, the assessee requested BIFR to discharge it from the purview of SICA/BIFR. Accordingly, vide order dated 16.06.2010, BIFR held that the company ceased to be a sick industrial company and the revival of the company was sustainable.

Following is the operative part of the order passed by BIFR on 16.06.2010.

“4.4 Having considered the submissions made in the hearing and materials on the record, the Bench issued the following directions:-

(a) The company M/s. Supertex Industries Ltd ceases to be a sick industrial company, within the meaning of section 3(1)(o) of the SICA as its net worth has turned positive as per ABS as on 30.03.2009 and as per the Provisional Balance Sheet as on 31.03.2010. The revival of the company is sustainable. It is therefore discharged from the purview of SICA/BIFR.

(b) The un-implemented provisions of SS-08, as may be there, would be implemented by the company/promoters and concerned agencies and implementation would be monitored by the Board of Directors (BOD) of the company.

(c) The company is directed to pay MA fee of Rs.2.00 lakhs to MA(SBI) immediately.

(d) The Board discharges State Bank of India from the responsibility of Monitoring Agency (MA)

(e) The Special Director, if any, appointed by the Board on company’s ‘Board of Directors’ (BOD), would stand discharged with immediate effect. The company would complete necessary formalities with the concerned ‘Registrar of Companies’ (ROC), as may be required.”

(Emphasis supplied)

3. The Director General of Income Tax (A) [DGIT for short] challenged the same before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) in appeal no.216/2010. The DGIT was mainly aggrieved by the direction given by the BIFR to implement the unimplemented provisions of SS- 08 vide para 4.4(b) above. It was contended that once the company had become net worth positive and having been discharged from the provisions of SICA, such direction was not competent. The record discloses that AAIFR has dismissed the appeal vide order dated 29.09.2011, which has been confirmed by Delhi High Court.

4. The assessee filed its Return of Income (RoI) for the relevant year on 12.09.2012 declaring income as ‘Nil’ after claiming entire business income of Rs.1,70,50,855/-, being set off against brought forward business losses and unabsorbed depre