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2022 (2) TMI 754 - HC - Income TaxLegality and validity of the order passed by the Income Tax Appellate Tribunal - Approval of resolution plan for insolvency - National Company Law Tribunal, Ahmedabad Bench ( NCLT ) approving the Resolution Plan (second revised Resolution Plan) including the addendum dated 19th September 2020 of the MCPI Private Limited (Successful Resolution Applicant) in exercise of its powers under Section 31(1) of the Insolvency and Bankruptcy Code, 2016 (for short, the Code ) for the Insolvency Resolution of the corporate debtor i.e. the applicant (Garden Silk Mills Limited) - whether the appeal of 2013 filed by the Revenue could be said to have stood abated with the passing of the order passed by the NCLT ? - HELD THAT -The aforesaid question is now no longer res integra in view of the recent pronouncement of the Supreme Court in the case of Ghanshyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstructions Company Limited 2021 (4) TMI 613 - SUPREME COURT wherein the Supreme Court took the view that the 2019 amendment to Section 31 of the I B Code is clarificatory and declaratory in nature and therefore will have a retrospective operation. If the Revenue is dissatisfied in any manner with the sanctioning of the Resolution Plan by the NCLT, then liberty may be reserved in favur of the Revenue to prefer an appeal under Section 61 of the Code, 2016 before the NCLT. We allow this Civil Application filed by the Revenue does not survive and the same is disposed of accordingly without expressing any opinion on the merits of the substantial questions of law framed therein with the aforesaid liberty to file an appeal under Section 61 of the Code, 2016. The Civil Application as well as the Tax Appeal both are disposed of accordingly. Rule is made absolute to the aforesaid extent.
Issues involved:
1. Challenge to the legality and validity of an order passed by the Income Tax Appellate Tribunal. 2. Abatement of a pending Tax Appeal due to developments post-2013. 3. Interpretation of Section 31(1) of the Insolvency and Bankruptcy Code, 2016. 4. Effect of the 2019 amendment to Section 31 of the Insolvency and Bankruptcy Code. 5. Applicability of the Supreme Court judgment in Ghanshyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstructions Company Limited. 6. Reservation of liberty for the Revenue to appeal under Section 61 of the Insolvency and Bankruptcy Code. Detailed Analysis: 1. The High Court of Gujarat was approached with an application by the original respondent-assessee in a Tax Appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961. The challenge was against the legality and validity of an order passed by the Income Tax Appellate Tribunal. 2. The applicant brought to the Court's attention developments post-2013, specifically the abatement of a pending Tax Appeal due to an order by the National Company Law Tribunal (NCLT) approving a Resolution Plan under the Insolvency and Bankruptcy Code, 2016. This raised the question of whether the appeal filed by the Revenue in 2013 stood abated. 3. The Court analyzed Section 31(1) of the Insolvency and Bankruptcy Code, 2016, which deals with the approval of resolution plans by the Adjudicating Authority. The provision binds various stakeholders once a resolution plan is approved, including governmental entities to whom dues are owed. 4. The Court noted the 2019 amendment to Section 31 of the Insolvency and Bankruptcy Code, which clarified the inclusion of governmental entities as stakeholders. This clarification was deemed retrospective in nature, impacting the extinguishment of claims not part of a resolution plan. 5. Referring to the Supreme Court judgment in Ghanshyam Mishra and Sons Private Limited vs. Edelweiss Asset Reconstructions Company Limited, the Court highlighted that the 2019 amendment was clarificatory and declaratory, with retrospective operation leading to the extinguishment of certain claims post-approval of a resolution plan. 6. Considering the above legal principles, the Court concluded that the Tax Appeal filed by the Revenue in 2013 did not survive due to the NCLT order. The Court disposed of the appeal without expressing an opinion on the substantive legal questions, while reserving the liberty for the Revenue to appeal under Section 61 of the Insolvency and Bankruptcy Code if dissatisfied with the Resolution Plan sanctioned by the NCLT.
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