M/S. COSMIC FERRO ALLOYS LTD.,KOLKATA vs. DCIT, CIRCLE -1(2), KOLKATA

The provisions of the Insolvency and Bankruptcy Code, 2016 thus are given overriding effect and as held by the Hon'ble Supreme Court while disposing in the case of Pr. CIT v. Monnet Ispat & Energy Ltd. [Petition for Special Leave to Appeal (C) No(s). 6483 of 2018, dated 10-8-2018], it is obvious that the Insolvency and Bankruptcy Code, 2016 going by section 238 will override anything inconsistent contained in any other enactment, including the Income-tax Act, 1961. A reference in this regard was made by the Hon'ble Supreme Court to their Lordships earlier decision in the case of Dena Bank v. Bhikhabhai Prabhudas Parekh & Co. 2000 taxmann.com 2145, wherein it was clarified that Income-tax dues, being in the nature of crown debts, do not take precedence over secured creditors, who are private persons. 9. In the case of Swiss Ribbons (P.) Ltd. v. Union of India [2019] 101 taxmann.com 389/152 SCL 365, Hon'ble Supreme Court held that the core objective of the Code is to readapt the corporate debtor monetarily and for

In the case of Ghanashyam Mishra & Sons (P.) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. [2021] 126 taxmann.com 132/166 SCL 237, it was held y the Hon'ble Supreme Court that a bare reading of section 31(1) of the Code is enough to establish that once the resolution plan receives the assent of adjudicating authority, it shall be binding on all the respective entities, including corporate debtor and its employees, members, creditors, guarantors and other stakeholders. The said section 31 was subsequently amended in 2019 to clarify that the term "other stakeholders” include Central Government, State Government, and other local bodies, and this amendment has been held by the Courts as having retrospective effect being clarificatory and declaratory in nature.

Keeping in view the legal position emanating from the discussion made above in the light of judicial pronouncements of the Hon'ble Supreme Court, it is thus clear that the order passed by the National Company Law Tribunal under section 31 of the Insolvency and Bankruptcy Code, 2016 has overriding effect over anything inconsistent contained in the Income-tax Act and it shall be binding on all the respective entities including other stakeholders, which include Central Government, State Government and other Local Bodies. As per the said order delivered in the case of the assessee-company affirming the Resolution Plan, all dues under the provisions of the Income-tax Act including taxes, duty, penalties, interest, fines, cesses, unpaid tax deducted at source/tax collected at source, whether admitted or not, due or contingent, whether part of above claim of income tax authorities or not, whether part of tax due diligence finding or not asserted or unasserted, crystallized or uncrystallized, known or known, secured or unsecured, disputed or undisputed in relation to any period prior to the acquisition of control by the resolution applicant over the company pursuant to this plan shall extinguished by virtue of the order of the adjudicating authority and the company should not be liable to pay any amount against such demand. Further, all assessments or other proceedings pending in case of the company, on the date of the order of the adjudicating authority relating to the period prior to that date, shall stand terminated and all consequential liabilities, if any, should be deleted and should be considered to be not payable by the company by virtue of the order of the

Since the present appeal involving AY 2010-11 relates to the period prior to the acquisition of control by the Resolution Applicant over the company pursuant to this plan, all dues under the provisions of the Income-tax Act 1961 including taxes, duty, penalties. Interest fines, cesses, etc. shall stand extinguished by virtue of the order of the National Company Law Tribunal and all proceedings including the appellate proceedings pending on the date of the order of the National Company Law Tribunal including the present proceedings relating to the prior period to the date of order shall stand extinguished and all consequential liabilities, if any, should be deleted and should be considered to be not payable by the Company. In the light of the order of the National Company Law Tribunal (NCLT) dated 12-2-2018 passed in assessee's case, we deem it fit to restore the case for the assessment year under consideration before us to Assessing Officer for taking necessary action in accordance with law.”

Unhesitatingly, in our mind, we are convinced by the appraisal of the Ld. AR about subsequent developments in the case of the assessee under the Code before the NCLT, Kolkata and find that the issue discussed is no longer res integra. In the present set of facts where the impugned year i.e. AY 2013-14 relevant to financial year 2012-13 relates to a period prior to the date of order of NCLT, Kolkata which is dated 11.10.2018, we are inclined to restore the present matter to the file of Ld. AO for taking necessary action in accordance with the law, which on the same issue was similarly dealt by the Co-ordinate bench of ITAT Kolkata (supra), keeping in view the legal position emanating from the judicial pronouncements of Hon’ble Supreme Court referred (supra) under the similar set of facts and law. Accordingly, appeal of the assessee is allowed for statistical purpose.

In the result, the appeal of the assessee is allowed for statistical purpose.