SIMHAPURI ENERGY LIMITED ,HYDERABAD vs. DY. COMMISSIONER OF INCOME TAX , CIRCLE-3(2), HYDERABAD

At the outset it is represented by the Learned AR that the Corporate Insolvency Resolution Proceedings (CIRP) are initiated by admitting the application under section 7 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) and moratorium under section 14 of the Code was declared by the National Company Law Appellate Tribunal (NCLAT) by order dated 26/06/2020. In terms of the moratorium, the institution and continuance of the proceedings against the assessee are prohibited. Learned DR submitted that the state of affairs obtaining as on today are not available and it is not known at what stage the CIRP are pending. Learned AR also submits that such facts are yet to be ascertained.

Be that as it may, 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 (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, 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.