2022 (5) TMI 820 - AT - Income Tax

Claim before the Insolvency Resolution Professional basing on the demand notice/competition sheet and outstanding demand taken - crystalized liabilities and unclaimed liabilities of the Corporate Debtor - HELD THAT - We are of the considered opinion that the Revenue is also bound by the Resolution plan as accepted by the NCLT and not entitled to anything more than what is provided therein. It is submitted across the Bar by the Ld. AR that the Revenue did not prefer any appeal against the order passed by the NCLT. Amount provided under the resolution plan is only Rs. 22 Lakhs as against the claim of the Revenue to the tune of Rs. 5.93 Crores and therefore, the assessee cannot have any grievance in disposing-of these appeals in tune with the orders of the NCLT. Appeals are disposed-of accordingly.

Summary

Issues:
1. Dispute over orders passed by the CIT(A) for the AY 2008-09 and AY 2013-14.
2. Impact of Corporate Insolvency Resolution Process on the claims of the parties.
3. Interpretation of Section 31 of the Insolvency and Bankruptcy Code.
4. Adherence to the resolution plan approved by the NCLT.
5. Resolution of appeals based on the NCLT's decision.

Analysis:
1. The appeal arose from orders by the CIT(A) for the AY 2008-09 and AY 2013-14. The Revenue filed ITA Nos. 562 & 563/Hyd/2018, while the assessee filed C.O. Nos. 30 & 31/Hyd/2018 supporting the CIT(A)'s orders.

2. The Corporate Insolvency Resolution Process impacted the case as the NCLT accepted a resolution plan submitted by specific applicants, extinguishing all liabilities of the corporate debtor as of the approval date. The resolution plan's acceptance was based on the claims filed by the Revenue and other creditors.

3. The interpretation of Section 31 of the Insolvency and Bankruptcy Code was crucial. The Supreme Court's decision in Ghanashyam Mishra and Sons Vs. Edelweiss Asset Reconstruction clarified that once a resolution plan is approved, all claims not included in the plan are extinguished. The 2019 amendment to Section 31 was considered clarificatory and declaratory.

4. The Tribunal analyzed the NCLT's order approving the resolution plan and concluded that the Revenue was bound by the plan's provisions. The Revenue's claim for a higher amount was not entertained as the resolution plan specified a lower sum, which the assessee accepted.

5. As the Revenue did not challenge the NCLT's decision and the resolution plan provided for a specific amount, the Tribunal disposed of the appeals in line with the NCLT's order. Both the Revenue's appeals and the assessee's Cross Objections were treated as allowed for statistical purposes.

In conclusion, the judgment emphasized the binding nature of a resolution plan approved by the NCLT under the Insolvency and Bankruptcy Code, ensuring that all claims not included in the plan are extinguished. The decision showcased the importance of adhering to the resolution plan's terms and respecting the NCLT's approval in resolving disputes related to corporate insolvency.