PTL ENTERPRISES Vs. DEPUTY COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) I.T.A. Nos.193 of 2012, 185, 200, 206, 207, 227 of 2013, 92 and 93 of 2014 Dated this the 22nd day of July, 2021

(2.) Though this appeal was admitted on six questions of law, three main issues arise for consideration, and hence we re-framed the questions of law into three, and they are as follows:

(3.) The assessee is a tyre manufacturing company, earlier known as Premier Tyres Ltd. and later renamed as M/s.PTL. It was incorporated on 29.10.1959 with the object of carrying on the business of manufacture of tyres. Over the years, the company incurred business losses, and the company's entire net worth eroded. Assessee was declared as a sick company under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Thereafter, a scheme for rehabilitation and revival was prepared, which obtained the approval of the Board for Industrial and Financial Reconstruction (BIFR) on 17.04.1995. The scheme provided for an arrangement between M/s.Apollo Tyres Ltd. and the assessee. The approved scheme contemplated M/s.Apollo Tyres Ltd. (for short 'ATL') to operate the plant and machinery of the assessee under a lease deed for eight years, i.e. 01.04.1995 till 31.03.2003, on a total rent of Rs.45.5 crores for the entire period. As per the scheme, the entire production was taken over by ATL and the expenses incurred by the assessee, including the labour charges for operating the plant were reimbursed by ATL.