PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) BENGALURU., vs. MUKTAR MINERALS PVT. LTD.,

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TXA/8/2017HC BombayHCBM05002704201629 August 2023Author: HON'BLE SHRI JUSTICE M. S. SONAK,HON'BLE SHRI JUSTICE BHARAT P. DESHPANDE3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court decided to dispose of all four appeals. It held that it would be appropriate to grant liberty to the parties/liquidator to seek revival of the appeals depending on the final order that the NCLT shall eventually make in the liquidation proceedings. This course of action was adopted by analogy with similar decisions from the Delhi High Court and the ITAT Mumbai Bench. The reasoning was based on the provisions of the IBC and the need to await the outcome of the liquidation proceedings before making a final determination on the tax appeals. The operative direction is to dispose of the appeals with liberty to seek revival.

What were the facts?

These are four tax appeals filed by the Revenue against Muktar Minerals Pvt. Ltd. During the pendency of these appeals, the respondent company went into liquidation. The National Company Law Tribunal (NCLT) imposed a moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC) on 05/05/2021. The liquidator subsequently admitted the Revenue's claim of ₹32,11,68,909/- before the NCLT. The High Court considered the provisions of the IBC and relevant Supreme Court and Delhi High Court decisions in similar matters.

What were the issues?

1. Whether the appeals should be disposed of in light of the company's liquidation and the moratorium imposed by the NCLT under Section 14 of the IBC. Assessee's Contention: The judgment does not record any specific contentions made by the respondent assessee. The proceedings were primarily guided by the submissions of the Revenue and the court's own consideration of legal precedents. Revenue's Contention: The Revenue, through its Standing Counsel, pointed out the company's liquidation and the admission of its claim by the liquidator. It also referred to Section 60(6) of the IBC regarding the exclusion of the moratorium period for limitation purposes. The Revenue relied on decisions of the Supreme Court in Principal Commissioner of Income-tax v/s. Monnet Ispat & Energy Ltd and New Delhi Municipal Council v/s. Minosha India Ltd, and the Delhi High Court in Pr. Commissioner of Income Tax-6 New Delhi v/s. Monnet Ispat & Energy Ltd. The Revenue also referred to an ITAT decision in Pratibha Industries Ltd v/s. Deputy Commissioner of Income-tax.

Which sections of the Income-tax Act were involved?

Section 14,Section 60(6)

AI-generated summary — verify with the full judgment below

1 TXA-7-2017 & ORS..DOC …Appellant ...Respondent Ms Amira Abdul Razaq, Standing Counsel for the Appellant. Mr Pavithran A.V., Advocate for the Respondent. CORAM: M.S. SONAK & BHARAT P. DESHPANDE,JJ. DATE: 29th AUGUST,2023 P.C.:

1.

Heard Ms Razaq, learned Standing Counsel for the Income Tax Department and Mr Pavithran, learned Counsel for the respondent.

2.

These tax appeals have been instituted by the Revenue. During the pendency of these tax appeals, admittedly, the respondent- Company has gone into liquidation. The National Company Law Tribunal (NCLT) by its order dated 05/05/2021 has imposed a moratorium under Section 14 of the Insolvency and Bankruptcy Code (IBC). 29th August,2023

1 TXA-7-2017 & ORS..DOC

3.

Ms Raqaz points out that the liquidator, by his communication dated 28/03/2023 has admitted the claim of the Revenue to the extent of 32,11,68,909/-before the NCLT in the proceedings under the IBC. ₹

4.

Considering the provisions of IBC and the decisions of the Hon’ble Supreme Court in the case of Principal Commissioner of Income-tax v/s. Monnet Ispat & Energy Ltd ([2019]107 taxmann.com 481 (SC)), New Delhi Municipal Council v/s. Minosha India Ltd ([2022]138 taxmann.com 73(SC)) and the decision of the Delhi High Court in Pr. Commissioner of Income Tax-6 New Delhi v/s. Monnet Ispat & Energy Ltd. ([2017] ibclaw.in 08 HC), it would be appropriate to dispose of these appeals by granting liberty to the parties/liquidator to seek revival depending upon the order that the NCLT shall eventually make in the liquidation proceedings.

5.

This was the precise course of action adopted by the Delhi High Court in the case of Monnet Ispat and Energy Ltd.(supra). Ms Razaq also placed for consideration of this Court a decision of ITAT in Pratibha Industries Ltd v/s. Deputy Commissioner of Income-tax ([2022] 142 taxmann.com 295 (Mumbai - Trib.)), wherein in similar circumstances, a similar approach was adopted. The appeals were disposed of with liberty to the parties/liquidator to seek recall or revival as and when the occasion arises.

6.

Ms Razaq also referred to the provisions of Section 60(6) of IBC in the context of the exclusion of the moratorium period for the purposes of limitations.

7.

Accordingly, all these appeals are disposed of with liberty to the parties/liquidator to seek revival depending upon the orders made by the 29th August,2023

1 TXA-7-2017 & ORS..DOC NCLT in the proceedings for the liquidation of the respondent- Company. BHARAT P. DESHPANDE,J. M. S. SONAK, J. 29th August,2023 MEENA VISHAL BHOIR MEENA VISHAL BHOIR Date: 2023.08.29 17:26:23 +05'30'

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