I.T.O, WARD-8(2), KOLKATA, KOLKATA vs. M/S. SARGA HOTEL PVT. LTD. , SALT LAKE

ITA 664/KOL/2023Status: DisposedITAT Kolkata31 December 2025AY 2013-149 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the appeals filed by the Revenue have become infructuous due to the proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). The Tribunal noted that the NCLT had admitted the petition under Section 7 of the IBC, commenced CIRP, and enforced a moratorium under Section 14. Subsequently, a resolution plan was approved by the NCLT under Section 31 of the IBC. Citing the Supreme Court's decision in Ghanashyam Mishra & Sons (P.) Ltd. v. Edelweis Asset Reconstruction Co. Ltd. and other judicial pronouncements, the Tribunal emphasized that upon the approval of a resolution plan, all claims, including statutory dues not part of the plan, stand extinguished. The IBC has an overriding effect over other laws, including the Income Tax Act, as per Section 238 of the IBC. Therefore, no proceedings can be initiated or continued against the corporate debtor, including income tax proceedings or recovery of demands, once a resolution plan is approved. The Tribunal dismissed both appeals as infructuous, granting liberty to the Revenue to seek revival of the appeals if the resolution plan is not accepted or is rejected, by filing an appropriate application within the permissible limitation period.

What were the facts?

The Revenue filed two appeals before the ITAT, Kolkata, challenging the orders of the CIT(A) for Assessment Years (AYs) 2013-14 and 2014-15. The appeals were delayed by 49 days, and the Revenue sought condonation, citing issues with receiving the CIT(A)'s order. The Tribunal condoned the delay. The core of the dispute involves the CIT(A) granting relief to the assessee by allowing certain expenditures charged to the profit and loss account, which the Assessing Officer (AO) had disallowed. Subsequently, it was revealed that the assessee company, M/s. Sarga Hotel Private Limited, was undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC). The National Company Law Tribunal (NCLT) had approved a resolution plan, settling admitted claims, including statutory dues, for a reduced amount.

What were the issues?

1. Whether the appeals filed by the Revenue are maintainable given that the assessee company is undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (IBC), and a resolution plan has been approved by the NCLT? Assessee's Contention: Not explicitly recorded as the assessee did not appear. However, the submission regarding the NCLT order and approved resolution plan implies that the appeals should be considered infructuous. Revenue's Contention: The Revenue argued that the CIT(A) erred in not considering the disallowance made by the AO on account of business expenditure and in allowing capital expenditure charged to the profit and loss account, which was adjusted against interest income from fixed deposits. The Revenue contended that the assessee had yet to commence business as the hotel was not completed. 2. Whether the provisions of the IBC, 2016, particularly the approval of a resolution plan, have an overriding effect on the proceedings under the Income Tax Act, 1961, rendering the appeals infructuous? Assessee's Contention: Not explicitly recorded. However, the information provided about the CIRP and approved resolution plan indicates that the IBC provisions should prevail. Revenue's Contention: Not explicitly recorded. The Revenue's grounds of appeal focus on the merits of the disallowances and allowances made by the AO and CIT(A).

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 31,Section 7,Section 14,Section 238,Section 178(6)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(5)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, KOLKATA C BENCH, KOLKATA

Before: SHRI GEORGE MATHAN & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

These two appeals filed by the Revenue are against the separate orders of the Commissioner of Income Tax (NFAC), Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for AYs 2013-14 & 2014-15 dated 16.03.2023, which have been passed against the assessment orders u/s 143(3) of the Act, dated 29.02.2016 and 16.12.2016, respectively. Since both the appeals were heard together, they are being decided vide this common order for the sake of convenience and brevity.

1.

1 The Registry has informed that the both the appeals a

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 31

All 329 judgments and leading authorities on Section 31 →

Recent GST High Court judgments

Search GST case law →