INDU PROJECTS LIMITED,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(1), HYDERABAD

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ITA 18/HYD/2019Status: DisposedITAT Hyderabad16 August 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 moratorium under the Insolvency and Bankruptcy Code, 2016, pending proceedings against the corporate debtor cannot be continued. The claims are frozen upon approval of a resolution plan, and any claims not part of the plan are extinguished.

What were the facts?

The assessee, Indu Projects Limited, filed appeals for assessment years 2009-10 and 2010-11. One appeal was barred by limitation but was condoned. Both parties represented that Corporate Insolvency Resolution Proceedings (CIRP) were pending against the assessee.

What were the issues?

Whether pending income tax appeals can continue when the assessee is undergoing Corporate Insolvency Resolution Proceedings and a moratorium is in effect under the Insolvency and Bankruptcy Code, 2016.

Which sections of the Income-tax Act were involved?

Section 13,Section 14,Section 31

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”, HYDERABAD

Before: SHRI RAMA KANTA PANDA & SHRI LALIET KUMAR

For Respondent: Shri Solge Joge Kottaram, CIT-DR
Hearing: 11/08/2022

आदेश / ORDER PER BENCH :

1.

Aggrieved by the order(s) passed by the learned Commissioner of Income Tax (Appeals) – 12, Hyderabad (“Ld. CIT(A)”), in the case of M/s.Indu Projects Limited (“the assessee”) for the assessment years 2009-

Indu Projects Limited.

10 and 2010-11, assessee preferred these appeals. For the sake of convenience, we dispose-of these appeals by this common order.

2.

Out of the four appeals, appeal in filed by the assessee is barred by limitation by 28 days. It has moved a condonation explaining reasons thereof. We have heard both the parties on this preliminary issue. Having regard to the reasons given in the petition, we condone the delay and admit the appeal for hearing.

3.

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.

4.

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 adjudicating authority after admission 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,

Indu Projects Limited. 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.

5.

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 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

Indu Projects Limited. steps if any, may be taken by the appellant/respondent. We, therefore, granting leave to the appellants/respondents in 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.

6.

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

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