BASAI STEELS & POWER PRIVATE LIMITED,HYDERABAD vs. DCIT., CIRCLE-1(3), HYDERABAD, HYDERABAD

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ITA 1891/HYD/2014Status: DisposedITAT Hyderabad20 October 2022AY 2010-114 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 upon approval of a resolution plan by the Adjudicating Authority, all claims not part of the plan stand extinguished, as per the Supreme Court's decision in Ghanashyam Mishra And Sons. Therefore, the appeals could not be proceeded with.

What were the facts?

The assessee's appeals for AYs 2009-10, 2010-11, and 2011-12 were before the ITAT. Corporate Insolvency Resolution Proceedings (CIRP) were initiated against the assessee under the Insolvency and Bankruptcy Code, 2016, and a resolution plan was approved by the National Company Law Tribunal (NCLT).

What were the issues?

Whether the ITAT appeals can be proceeded with after the approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016, which extinguishes claims not included in the plan.

Which sections of the Income-tax Act were involved?

Section 31

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

Before: Shri Rama Kanta Panda & Shri K.Narasimha Chary

For Appellant: Shri C.P.Ramaswami, Advocate
For Respondent: Shri Rajendra Kumar, CIT-DR
Hearing: 20.10.2022Pronounced: 20.10.2022

both these appeals were heard together and are being disposed-of by this common order.

2.

At the outset it is represented by the Learned AR that no adjudication is necessary in this matter, since at the instance of one of the operational creditors, Corporate Insolvency Resolution Proceedings (CIRP) where initiated under the provisions of the Insolvency and Bankruptcy Code, 2016 (“the Code”) in CA No. 86 of 2018 in CP (IB) No. 77/09/HDB/2017 on the file of the National company law Tribunal, Hyderabad (NCLT) and the same are concluded by the NCLT by order dated 13.04.2018 under section 31 of the Code. Ld. AR submitted that the rights, liabilities and disabilities of the parties stood crystallised as per the Resolution Plan as approved by the Adjudicating Authority as is evident from paragraph No. 8 of the order dated 13.04.2018, in terms of 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). Learned DR concedes this factual and legal position as submitted by the Ld. AR.

3.

We have considered the issue in the light of the provisions of and the decision of the Hon'ble Apex Court in the case of Ghanashyam Mishra and Sons vs Edelweiss Asset Reconstruction (supra). The copy of the order dated 13.04.2018 establishes that at the instance of 1 of the one of the operational creditors, CIRP were initiated and concluded and the Adjudicating Authority approved the same. In Ghanashyam Mishra And Sons (supra), it was held that,

(i) once a resolution plan is duly approved by the Adjudicating Authority under sub section (1) of Section 31, the claims as Basai Steels &Power Pvt.Ltd. 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) (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 decision in Ghanashyam Mishra And Sons (supra), clearly shows that when once CIRP reach the logical conclusion with due approval of the resolution plan 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.

5.

It, therefore, follow us that these appeals cannot be proceeded with and the parties have to work out their remedies as per the CIRP as approved by the adjudicating authority. With this view of the Basai Steels &Power Pvt.Ltd.

matter, we consider the request of the Ld. AR that these appeals have become infructuous and the same may be dismissed as infructuous.

6.

In the result, these appeals are dismissed in limine.

Order pronounced in the Open Court on this the 20th day of October, 2022.

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