DY. COMMISSIONER OF INCOME TAX, CIRCLE-16(2), HYDERABAD, HYDERABAD vs. DECCAN CHRONICLE HOLDINGS LIMITED, SECUNDERABAD

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ITA 1061/HYD/2017Status: DisposedITAT Hyderabad22 July 2022AY 2011-125 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the moratorium under the Insolvency and Bankruptcy Code, 2016, prohibits the continuation of pending suits or proceedings against the corporate debtor. Claims not part of an approved resolution plan are extinguished.

What were the facts?

The assessee, M/s. Deccan Chronicle Holdings Ltd., is undergoing Corporate Insolvency Resolution Proceedings (CIRP). The National Company Law Appellate Tribunal (NCLAT) has jurisdiction over the matter.

What were the issues?

Whether pending appeals can be continued during Corporate Insolvency Resolution Proceedings (CIRP) under the Insolvency and Bankruptcy Code, 2016, and the implications of a moratorium and resolution plan approval.

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 K.NARASIMHA CHARY

For Respondent: Shri Y.V.S.T.Sai, CIT-DR
Hearing: 19/07/2022

आदेश / ORDER PER K. NARASIMHA CHARY, JM: Aggrieved by the orders passed by the learned Commissioner of Income Tax (Appeals)-4, Hyderabad (“Ld. CIT(A)”), in the case of M/s.Deccan Chronicle Holdings Ltd., (“the assessee”) for the assessment years 2010-11, 2011-12, 2012-13 & 2013-14, both the assessee and the Revenue preferred these appeals. For the sake of convenience, we dispose-of these appeals 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 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

1.

Deccan Chronicle Holdings Ltd., (Batch files) 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 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

Deccan Chronicle Holdings Ltd., (Batch files) 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 of assessee and Revenue are dismissed in limine.

Order pronounced in the open court on this the 22nd day of July, 2022

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