VASAN HEALTH CARE PRIVATE LIMITED,CHENNAI vs. ACIT,CC-2(1), CHENNAI

आयकर अपीलीय अधिकरण, ‘A’ न्यायपीठ, चेन्नई IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, CHENNAI श्री एबी टी वर्की, न्याययर्क सदस्य एवं श्री एस. आर. रघुनाथा, लेखा सदस्य के समक्ष BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI S. R. RAGHUNATHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA Nos.263, 264, 265 & 266/Chny/2021 ननिाारण वर्ा / Assessment Years: 2013-14, 2014-15, 2015-16 & 2016-17 Vasan Health Care Private Limited The Assistant Commissioner Flat No.5, 1st Floor, Door No.10/12 vs. of Incoe-tax Anu Santhi Apartment Corporate Circle 2(1) 4th Cross Street, CIT Colony Chennai. Mylapore, Chennai – 600 004. [PAN: AACCV7028E] (प्रत्यथी/Respondent) (अपीलाथी/Appellant)

अपीलाथी की ओर से/Appellant by : Shri. J.K.Reddy, CA प्रत्यथी की ओर से/Respondent by : Ms. R. Anita, CIT सुनवाई की तारीख/Date of Hearing : 03.08.2026 घोर्णा की तारीख/Date of Pronouncement : 27.10.2026 आदेश /O R D E R PER S. R. RAGHUNATHA, AM : These four appeals filed by the assessee are directed against the separate orders of the Learned Commissioner of Income Tax (Appeals)-18, Chennai [hereinafter referred to as “the Ld.CIT(A)”] dated 17.11.2020, arising out of the assessment orders dated 29.12.2017 passed u/s.143(3) r.w.s.153C r.w.s.153A of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the Assessment Years (AYs) 2013-14, 2014-15, 2015-16 and 2016-17. Since the appeals arise out of the same search action and a common preliminary

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issue goes to the root of all of them, they were heard together and are disposed of by this common order for the sake of convenience.

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income in its return in response to the notice u/s.153C of the Act. For the AY 2016-17, the assessee filed its return of income on 31.10.2017 admitting a loss of Rs.39,11,57,305/-.

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(b). The Ld. CIT (Appeals) erred in not considering the Bills submitted for the additions of Fixed Assets amounting to Rs.103,67,72,236/- out of the total bills submitted amounting to Rs.185,51,98,017/- while working out the Depreciation allowable for the AY 2013-14. 3. Revenue Expenditure of Rs. 51,04,60,195/- being Rs. 33,96,60,945/- spent by the Assessee Company through New CWIP 2012-13 and Project Cost in the Boks of accounts of VHCPL and Rs. 17,07,99,250/- through VMCPL on behalf of VHCPL out of the amount of Rs.37,00,00,000/- transferred by VHCPL to VMCPL to be allowed as deductible Expenditure of the Assessee Company U/s.37(1) of the The Act, 1961 : (a) The Ld. CIT (Appeals) failed to implement the provisions of Sec.143(3) of the The Act, which states that an assessment order under this section has to be passed “after taking in to account all relevant material which he has gathered”. (b) The Ld. CIT (Appeals) failed to apply the provisions of Sec.132(4A) which provides for the presumption that “where during the course of search proceedings any books of account, documents, money, bullion, jewellery or other valuable article or thing is found in possession or control of any person, then such books/documents etc., belong to such person and the contents of such books of account/documents are correct”. (c). The Ld. CIT (Appeals) failed to apply the provisions U/s.37(1) of the The Act wherein no further proof is required for the expenses recorded in the books of account seized. … 4. The Order of the Ld.AO adding an amount of Rs. 94,84,797/- on account of “Disallowance of Referral Fees” was upheld by the Ld. CIT (Appeals) : (a). The Ld. CIT (Appeals) erred in not understanding that the Indian Medical Council (Profession Conduct, Etiquette and Ethics) Regulations, 2002 is for the “Registered Individual Medical Practitioners” but not to the Hospitals run by the Corporates. (b) The Ld. CIT (Appeals) erred in not understanding that the CBDT Clarificatory Circular No.5/2012 dated 01.08.2012 is applicable for Pharmaceutical and allied health sector Industries but not for Corporate Hospitals since the Circular clearly states in Para No.3 that “this disallowance shall be made in the hands of such Pharmaceutical and allied health sector Industries”. 5. The Assessee craves leave to add, amend, alter vary and / or withdraw any or all the above grounds of Appeal at the time of hearing.”

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appeals, as quantified in its written submissions dated 15.07.2026, are as under:

AY Depreciation u/s.32 Revenue expenditure Total (Rs.) (Rs.) u/s.37(1) (Rs.) 2013-14 14,19,00,519 51,04,60,195 65,23,60,714 2014-15 25,75,48,007 73,00,88,898 98,76,36,905 2015-16 36,81,32,766 50,45,43,287 87,26,76,053 2016-17 23,07,34,435 – 23,07,34,435 Total 99,83,15,727 174,50,92,380 274,34,08,107

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direct tax dues, the AO, vide proceedings u/s.156A r.w.s.153C of the Act dated 10.04.2024, reduced the demand for all the assessment years to nil. By order dated 28.05.2025, this Tribunal recalled its order dated 28.11.2022 and restored the appeals.

Clause Relief sought (in brief) Order of NCLT

15 Treatment as widely held company u/s.79; waiver of all tax For the CBDT and other dues including interest and penalties; relief from all past appropriate authorities to litigations pending at different levels; write-off of assets as consider keeping in view the deduction; continuance of MAT credit object of IBC, 2016

22 No tax, interest or penalty for any liability, claim or non- Granted, subject to the compliance up to the Implementation Date; any provisions of the Companies reassessment, revision or other proceedings under the Act, 2013 and other Income-tax Act deemed barred in relation to any period prior applicable laws to the Implementation Date

24 All expenses claimed in the preceding eight years and For the CBDT and other returns as submitted or not submitted to be treated as appropriate authorities to assessed, and all carry forward losses and depreciation to be consider keeping in view the treated as allowed object of IBC, 2016

25 All pending litigation, notices, past and on-going For the CBDT and other assessments and tax demands under indirect tax statutes to appropriate authorities to be treated as closed consider keeping in view the object of IBC, 2016

33 All civil and criminal litigations, proceedings, causes of Granted action, claims, disputes or other judicial or regulatory proceedings against the corporate debtor in relation to any period on or before the Closing Date to stand extinguished

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clauses 22 and 33 of the resolution plan, which were granted by the Hon’ble NCLT, all proceedings under the Act in relation to the period prior to the implementation date stand barred and all proceedings, claims and disputes relating to that period stand extinguished, and that the clean slate principle applies, under which no proceeding can be initiated or continued in respect of a claim that is not part of the resolution plan, as held by the Hon’ble Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Company Ltd., (2021) 9 SCC 657. 11. The ld.DR relied on the order of the Mumbai Bench of the Tribunal in EMI Transmission Ltd. v. DCIT (ITA No.1071/Mum/2026 and connected appeals), wherein it was held that adjudication on the merits of the additions would be purely academic where subsequent developments under the IBC had altered the substratum of the appeals. It was submitted that the resolution plan contains no provision for revival of the litigation relating to the period prior to the implementation date, and that the appeals are, therefore, not maintainable. 11. Per contra, the ld.AR, relying on the written submissions dated 15.07.2026, 27.07.2026 and 29.07.2026, submitted that clause 22 of the resolution plan operates only against the creditors of the corporate debtor and not against the resolution applicant, and does not bar the assessee from prosecuting its own appeals for the years prior to the implementation date. On merits, the ld.AR submitted that the bills for the additions to fixed assets were produced before the AO in the remand proceedings, and that the assets were in use, at least passively, for the purposes of the business, so that depreciation of Rs.99,83,15,727/- is allowable u/s.32 of the Act; and that the expenditure of Rs.174,50,92,380/- recorded in the seized books, which the AO excluded from the fixed assets, was paid through banking channels after deduction of tax at source and is allowable u/s.37(1) of the Act by virtue of the presumption u/s.132(4A) of the Act. It was submitted that, if these claims are allowed, the assessee would be entitled to a refund of the taxes of Rs.36,19,83,274/- paid by way of TDS and advance tax for these years, and to carry forward of losses

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of about Rs.274.34 crores. The ld.AR contended that the Hon’ble NCLT has granted the assessee a clean slate, the Department’s claim of Rs.506.73 crores having been settled for Rs.44.73 lakhs, and that the carry forward of losses cannot be denied where a clean slate is granted, since the losses are a factor taken into account by the resolution applicant. Reliance was placed on the decision of the Hon’ble Bombay High Court in AMNS Gandhidham Ltd. v. ACIT and of the Chennai ‘D’ Bench of the Tribunal in Orchid Pharma Ltd. v. DCIT, [2026] 186 taxmann.com 623. 12. We have heard the rival submissions, perused the orders of the authorities below and carefully examined the material available on record, including the order of the Hon’ble NCLT dated 03.02.2023 approving the resolution plan. In view of the preliminary objection raised by the Revenue, the question that arises for our consideration is whether, after the approval of the resolution plan and the consequent reduction of the demand to nil, these appeals by the corporate debtor against assessments relating to the period prior to the implementation date of the plan survive for adjudication on merits. We have confined ourselves to this question, and have not examined the merits of the additions. 13. Section 31(1) of the IBC provides that a resolution plan approved by the Adjudicating Authority shall be binding on the corporate debtor and its employees, members, creditors, including the Central Government, any State Government or any local authority to whom a debt in respect of the payment of dues arising under any law for the time being in force is owed, guarantors and other stakeholders involved in the resolution plan. The Hon’ble Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd. (supra) has held that, once a resolution plan is approved u/s.31(1) of the IBC, the claims as provided in the plan stand frozen and bind all stakeholders, including the Central Government; that all claims not forming part of the plan stand extinguished; and that no proceedings can be initiated or continued in respect of a claim not part of the plan. The object of this “clean slate” is that the resolution applicant takes over

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the corporate debtor free of claims relating to the period before the plan, so that it can run the business on the footing of the plan. 14. The plan in the present case gives effect to that principle in express terms. Clause 22, which has been granted by the Hon’ble NCLT, provides that no tax would be payable for any liability or claim up to the implementation date, and that any reassessment, revision or other proceedings under the Act in relation to any period prior to the implementation date would be deemed to be barred. Clause 33, which has also been granted, extinguishes all litigations, proceedings, causes of action, claims and disputes against the corporate debtor in relation to any period on or before the closing date. The Department’s claim for income-tax arrears of about Rs.506.73 crores was admitted in the CIRP and has been settled under the plan for Rs.44,73,371/-, and the AO has, in conformity with the plan, reduced the demand arising from the impugned assessments to nil. The assessments for the AYs 2013-14 to 2016-17, and the demands arising therefrom, have thus been finally dealt with under the resolution plan. 15. We are unable to accept the contention of the ld.AR that clause 22 operates only against the creditors and not against the resolution applicant or the corporate debtor. The clause is not so limited in its terms; it declares that any proceedings under the Act in relation to any period prior to the implementation date are deemed to be barred, without distinction as to the party by whom they are pursued. These appeals are a continuation of the assessment proceedings for the very period covered by the clause, and the relief sought in them is the re-determination of the total income for that period. Moreover, s.31(1) of the IBC makes the plan binding on the corporate debtor itself. The corporate debtor, having obtained under the plan the settlement of the tax arrears of Rs.506.73 crores for Rs.44.73 lakhs and the closure of the pre- implementation proceedings against it, cannot at the same time keep alive the same proceedings to obtain a re-determination of income in its favour. The clean slate operates in both directions in respect of the closed period: just as

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the Revenue cannot pursue the assessments or the demands for that period beyond what the plan provides, the assessments for that period cannot be reopened at the instance of the corporate debtor. 16. The ld.AR has submitted that the appeals would yield the assessee a refund of the taxes paid for these years and carry forward of losses of about Rs.274.34 crores. Neither consequence, in our view, can be a ground for adjudicating the appeals on merits. The relief sought by the resolution applicant in clause 24 of the plan, that all expenses claimed and returns submitted for the preceding eight years be treated as assessed and all carry forward losses and depreciation be treated as allowed, has not been granted by the Hon’ble NCLT, but has been left to the CBDT and other appropriate authorities to consider keeping in view the object of the IBC. The same is the position in respect of the waiver of tax dues and the relief from past litigation sought in clause 15. The Hon’ble NCLT having consciously left these matters to the CBDT, the carry forward of losses which the assessee seeks to generate through these appeals cannot be obtained by inviting this Tribunal to re-determine the income of the closed period. Nor can a refund of taxes paid for the period prior to the implementation date be claimed in the face of clauses 22 and 33 of the plan, the plan having dealt with the tax position of that period in its entirety. 17. The decisions relied on by the ld.AR do not, in our view, advance the case of the assessee. As we understand them, in AMNS Gandhidham Ltd. (supra) and Orchid Pharma Ltd. (supra), the question was whether the Revenue, which had not lodged its claim in the CIRP, could deny the corporate debtor the carry forward of losses after the approval of the resolution plan, on the strength of the clean slate principle. Those decisions protect tax attributes of the corporate debtor against an attempt by the Revenue to reopen matters closed by the plan. In the present case, the Department did lodge its claim, which has been settled under the plan; the assessee does not seek to protect an existing loss, but to create one by reopening assessments for the closed period, which determined positive income in each year; and the very relief

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relating to losses has been left by the Hon’ble NCLT to the CBDT. The present case is, therefore, materially different. On the other hand, the order of the Mumbai Bench in EMI Transmission Ltd. (supra) supports the view that, where subsequent developments under the IBC have altered the substratum of the appeals, an adjudication on the merits of the additions would be academic. 18. We, therefore, hold that, consequent to the approval of the resolution plan by the Hon’ble NCLT vide order dated 03.02.2023 and the reduction of the demand for all the years to nil vide proceedings dated 10.04.2024, the assessments for the AYs 2013-14 to 2016-17 stand concluded under the plan, and no effective relief can be granted to the assessee in these appeals. Any adjudication on the merits of the grounds raised, including the challenge to the validity of the assessment for the AY 2016-17, would be purely academic. The restoration of the appeals by our order dated 28.05.2025 was only for the purpose of hearing them, and did not foreclose this question. Accordingly, the appeals are dismissed as having become infructuous, without going into the merits of the grounds raised. It is made clear that we have not expressed any opinion on the merits of the additions, and that this order shall not preclude the assessee from pursuing before the CBDT or the appropriate authorities the reliefs referred to them by the Hon’ble NCLT under clauses 15, 24 and 25 of the resolution plan, nor permit the Revenue to recover any demand for the period prior to the implementation date otherwise than in accordance with the resolution plan. 19. Before parting, we may also observe that the jurisdiction of this Tribunal is confined to the subject matter of the appeal, namely, the issues arising from the orders of the Ld.CIT(A), which in turn emanate from the assessment orders for the relevant assessment years. In the present case, it is not the case of the assessee that any tax demand survives for any of the years under appeal, the AO having, in conformity with the order of the Hon’ble NCLT dated 03.02.2023, reduced the demand for all the four assessment years to nil vide proceedings dated 10.04.2024. The grievance of the assessee against the impugned orders,

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insofar as it relates to the tax determined, has thus ceased to exist. What the assessee now seeks, in substance, is a refund of the taxes paid for these years and the creation and carry forward of losses of about Rs.274.34 crores. These are new claims which do not arise from the orders of the authorities below and which, insofar as they concern the tax position of the period prior to the implementation date, have been left by the Hon’ble NCLT to the CBDT and other appropriate authorities under clauses 15 and 24 of the resolution plan. Such claims fall outside the scope of these appeals, and this Tribunal has no jurisdiction to adjudicate upon them. 20. In the result, all the four appeals of the assessee in ITA Nos.263 to 266/Chny/2021 are dismissed as infructuous.

Order pronounced in the court on 27th October, 2026 at Chennai.

Sd/- Sd/- (एबी टी वर्की ) (एस. आर. रघुनाथा) (ABY T VARKEY) (S. R. RAGHUNATHA) न्याययर्क सदस्य/Judicial Member लेखासदस्य/Accountant Member चेन्नई/Chennai, दिन ांक/Dated, the 27th October, 2026 Devadas आदेश की प्रतिलिपि अग्रेपिि/Copy to: 1. अपीलाथी/Appellant 2. प्रत्यथी/Respondent 3.आयकर आयुक्त/CIT– Chennai/Coimbatore/Madurai/Salem 4. ववभागीय प्रनतननधि/DR 5. गार्ा फाईल/GF Digitally signed by DEVADAS DEVADAS GOPALANACHARY GOPALANACHARY Date: 2026.10.28 17:53:48 +05'30'