THE PR. COMMISSIONER OF INCOME-TAX, PATIALA vs. M/S J.J. SOLVEX PVT. LTD. BHAWANIGARH ROAD, SAMANA (PAN: AAACJ4290N)

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ITA/182/2018HC Punjab & HaryanaPHHC01119024201827 August 2024Bench: MR. JUSTICE SANJEEV PRAKASH SHARMA,MR. JUSTICE SANJAY VASHISTH3 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the respondent company was declared insolvent under the IBC, 2016, and its resolution plan was accepted and approved by the Committee of Creditors and the NCLT on 08.07.2022. Following the Supreme Court's decision in Ghanashayam Mishra and Sons Private Limited vs Edelweiss Asset Reconstruction Company Limited, the Tribunal found that all claims, including statutory dues owed to the Central Government, if not part of the resolution plan, stand extinguished. Consequently, the auction purchaser cannot be held liable for dues arising under any law from the Central Government. The Income Tax Department's claim was therefore considered foreclosed after the NCLT's order. The appeal was deemed infructuous and dismissed. No issues were expressly left undecided.

What were the facts?

The appeal was filed by the Principal Commissioner of Income-Tax, Patiala (appellant) against M/s J.J. Solvex Private Limited (respondent). The respondent company was declared insolvent under the Insolvency and Bankruptcy Code, 2016 (IBC). A resolution plan was accepted by the Committee of Creditors and approved by the National Company Law Tribunal (NCLT) in IA No. 243 of 2021, with the approval order dated 08.07.2022. The appeal challenges an order or action from an unspecified authority for an unspecified assessment year, concerning a disputed amount not stated in the judgment. The procedural history relevant is the insolvency proceedings and the approval of the resolution plan.

What were the issues?

1. Whether the Income Tax Department's claim against the respondent company stands extinguished or foreclosed in light of the approved resolution plan under the Insolvency and Bankruptcy Code, 2016, and the Supreme Court's judgment in Ghanashayam Mishra and Sons Private Limited vs Edelweiss Asset Reconstruction Company Limited? (Question of law). Assessee's Contention: The respondent (assessee) argued that following the NCLT's approval of the resolution plan, all claims not part of the plan are extinguished and binding on all creditors, including the Central Government. They relied on the Supreme Court judgment in Ghanashayam Mishra and Sons Private Limited vs Edelweiss Asset Reconstruction Company Limited, which held that once a resolution plan is approved, all claims not part of the plan stand frozen and are binding on all stakeholders, and any claims not included are extinguished. Revenue's Contention: The judgment does not record any specific arguments made by the revenue (appellant).

Which sections of the Income-tax Act were involved?

Section 31

AI-generated summary — verify with the full judgment below

ITA-182-2018 (O&M) -1-

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-182-2018 (O&M) Date of Decision: 27.08.2024

The Pr. Commissioner of Income-Tax, Patiala .....Appellant versus M/s J.J. Solvex Private Limited .....Respondent CORAM: HON'BLE MR JUSTICE SANJEEV PRAKASH SHARMA HON'BLE MR JUSTICE SANJAY VASHISTH Present: Mr. Amanpreet (A.P.) Singh, Senior Standing Counsel for the appellant. Mr. Reshabh Bajaj, Advocate, for the respondent. ****** SANJEEV PRAKASH SHARMA

, J.

Learned counsel for the respondent has pointed that the respondent has after being declared insolvent in terms of Insolvency and Bankruptcy Code, 2016 has been taken over by auction purchaser in resolution plan as accepted by the NCLT in IA No. 243 of 2021 in terms of the approval by the Committee of the Creditors vide order dated 08.07.2022, the appellant Central Government Income Tax Authority, therefore, would have no stack of claim against the newly appointed auction purchaser of the property of the respondent in view of judgment of Supreme Court in Ghanashayam Mishra and Sons Private Limited vs Edelweiss Asset Reconstruction Company Limited 2021 (9) SCC 657, wherein it has been held as under:- “Conclusion 102. In the result, we answer the questions framed by us VARINDER SINGH 2024.09.09 14:47 I attest to the accuracy and authencity of this order/judgment

ITA-182-2018 (O&M) -2- as under: 102.1. That once a resolution plan is duly approved by the adjudicating authority under sub-section (1) of Section 31, the claims as provided in the resolution plan shall stand frozen and will be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority, guarantors and other stakeholders. On the date of approval of resolution plan by the adjudicating authority, all such claims, which are not a part of resolution plan, shall stand extinguished and no person will be entitled to initiate or continue any proceedings in respect to a claim, which is not part of the resolution plan. 102.2. The 2019 Amendment to Section 31 of the I&B Code is clarificatory and declaratory in nature and therefore will be effective from the date on which the I&B Code has come into effect. 102.3. Consequently all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the adjudicating authority grants its approval under Section 31 could be continued.” 2. In view of the fact that the respondent company has been declared insolvent under the IBC, 2016 and the resolution plan was accepted and approved by the Committee of Creditors and the auction purchaser cannot be held liable for the payment of dues arising under any law which are of the Central Government or any State Government or any VARINDER SINGH 2024.09.09 14:47 I attest to the accuracy and authencity of this order/judgment

ITA-182-2018 (O&M) -3- local authority, the claim of the Income Tax Department shall stand foreclosed after the order passed by the NCLT on 08.07.2022. The ITA (Appeal), therefore, has become infructuous and is accordingly dismissed. 3. All pending applications shall stand disposed of. (SANJEEV PRAKASH SHARMA) JUDGE (SANJAY VASHISTH) JUDGE 27.08.2024 Seema/vs Whether speaking/reasoned Yes/No Whether reportable Yes/No VARINDER SINGH 2024.09.09 14:47 I attest to the accuracy and authencity of this order/judgment

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