Section 178(6) of the Income Tax Act
Income-tax Act, 2025: s.322
Section 178(6) falls under section 178 of the Income-tax Act, 1961, which corresponds to section 322 (Company in liquidation) of the Income-tax Act, 2025.
Read section 322 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 178(6) is Ghanashyam Mishra And Sons. v. Edelweiss Asset Reconstruction (126 Taxmann.com 132), cited in 192 of the 39 judgments on BharatTax that turn on this section.
Leading authorities on Section 178(6)
Once a resolution plan is approved under Section 31(1) of the IBC, claims not included in the plan are extinguished and cannot be pursued. This applies to statutory dues owed to the government and other authorities.
The law does not compel individuals to perform impossible actions. The administration of law must consider this general exception in specific cases, acknowledging that it does not intend to compel impossibilities.
All claims, including statutory dues, that predate the approval of a resolution plan under the IBC stand extinguished by operation of law. No proceedings can be initiated or continued for such claims if they are not part of the approved plan.
Interest under sections 234B and 234C is not chargeable on book profits computed under section 115JB.
The moratorium period under the Insolvency and Bankruptcy Code, 2016, will be excluded when calculating the limitation period for proceedings involving a corporate debtor. The Assessing Officer can seek re-institution of an appeal if the resolution process concludes.
A taxpayer is not required under the law to perform what is impossible. This principle is supported by the maxim 'Lex Non Cogit ad impossibilia'.
The principle 'Lex Non Cogit ad impossibilia', meaning one is not required under the law to perform what is impossible, is considered in tax assessment proceedings.
Appeals filed by a corporate debtor before the Tribunal are dismissed as infructuous when proceedings cannot continue against the corporate debtor after an NCLT order, due to the moratorium period under the IBC Code.
Proceedings against a corporate debtor cannot continue after an order by the NCLT initiating Corporate Insolvency Resolution Process (CIRP) under the Insolvency & Bankruptcy Code, 2016.
The entire moratorium period under the Insolvency and Bankruptcy Code, 2016 (IBC) is excluded when computing the limitation period for proceedings concerning a corporate debtor. This provision takes precedence over the Income Tax Act, 1961.
