M/S TAKSHEEL SOLUTIONS LIMITED,HYDERABAD vs. INCOME TAX OFFICER, WARD-2(4), HYDERABAD

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ITA 1420/HYD/2017Status: DisposedITAT Hyderabad15 November 2022AY 2010-115 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that due to the ongoing CIRP and the moratorium under the Insolvency and Bankruptcy Code, 2016, the pending appeals could not be proceeded with. The claims not part of the resolution plan would stand extinguished upon its approval.

What were the facts?

The assessee company was undergoing Corporate Insolvency Resolution Proceedings (CIRP). The National Company Law Appellate Tribunal (NCLAT) had jurisdiction over the matter. The appeals were filed against orders for assessment years 2010-11, 2011-12, and 2012-13.

What were the issues?

Whether pending income tax appeals can be continued during Corporate Insolvency Resolution Proceedings (CIRP) and the effect of a moratorium under the Insolvency and Bankruptcy Code, 2016 on such appeals.

Which sections of the Income-tax Act were involved?

Section 13,Section 31

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad

Before: Shri Rama Kanta Panda & Shri Laliet Kumar

For Appellant: Shri P.Murali Mohan Rao, CA
For Respondent: Shri Jeevan Lal Lavidiya
Hearing: 15.11.2022

Per Bench: These above five appeals filed by the assessee are directed against the common order dated 31.01.2017 of the Learned Commissioner of Income tax (Appeals)-2, Hyderabad for the AY 2010-11, 2011-12 & 2012-13 respectively. For the sake of convenience all these appeals were heard together and are being disposed-of by this common order.

2.

At the outset it is represented by both the sides that the Corporate Insolvency Resolution Proceedings (CIRP) are pending against the assessee and as of now, Hon'ble National Company Law Appellate Tribunal (NCLAT) is seized with the jurisdiction.

3.

We have considered the issue in the light of the provisions of Insolvency and Bankruptcy Code, 2016 (“the Code”) and the decision of the Hon'ble Apex Court in the case of Ghanashyam Mishra And Sons vs Edelweiss Asset Reconstruction (2021) 126 taxmann.com 132 (SC). Under section 13 of the Code, the 3 Taksheel Solutions Limited adjudicating authority after adjudication of the application under section 7 or 9 or 10 of the Code shall declare a moratorium which shall include the prohibition of the institution of suits or continuation of pending suits or proceedings against the corporate debtor in any court of law or tribunal. In Ghanashyam Mishra And Sons (supra), it was held that, (i) 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; (ii) 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 I&B Code has come into effect; and (iii) 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.

4.

A reading of the provisions under section 13 and 14 of the Code along with the decision in Ghanashyam Mishra And Sons (supra), clearly shows that once the proceedings have commenced by institution of application under section 7 or 9 or 10 of the Code, the continuance of the pending proceedings is prohibited and when once they reach the logical conclusion with due approval of the resolution plan by the Adjudicating Authority

1.

4 Taksheel Solutions Limited 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. At any rate, for the time being, these appeals cannot be proceeded with during the continuance of the proceedings under the Code. However, depending upon the result of such proceedings before the adjudicating authority in respect of the corporate debtor, appropriate steps if any, may be taken by the appellant/respondent. We, therefore, granting leave to the appellants/respondents in all these appeals to seek the restoration of the appeals, if necessitated by the orders in the Corporate Insolvency Resolution Proceedings, dismiss the appeals in limine. We derive support for the above proposition from the decision of the Mumbai Bench of the Tribunal in the case of Mahavir Roads & Infrastructure Pvt. Ltd., Vs. DCIT in to 651/Mum/2019 (AYs.2008-09 to 2013-14), dt.08/06/2022.

5.

In the result, all these appeals by the assessee are dismissed in limine.

Order pronounced in the Open Court on 15th November, 2022.

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