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2023 (4) TMI 556 - AT - Income Tax


Issues:
- Appeal against the order of ld. Commissioner of Income Tax (Appeals)-2, Aurangabad for the assessment year 2013-14.
- Corporate Insolvency Resolution Proceedings (CIRP) pending against the respondent-assessee.
- Interpretation of provisions of Insolvency and Bankruptcy Code, 2016 (“the Code”).
- Effect of resolution plan approval on claims against the Corporate Debtor.
- Prohibition of proceedings against the Corporate Debtor during CIRP.
- Application of the decision in Ghanashyam Mishra And Sons vs. Edelweiss Asset Reconstruction (2021) 126 taxmann.com 132 (SC).
- Impact of the 2019 amendment to Section 31 of the I&B Code.
- Extinction of claims not part of the resolution plan upon approval.
- Overriding effect of IBC provisions.
- Dismissal of appeal by the Revenue.

Analysis:
The judgment pertains to an appeal against the order of the ld. Commissioner of Income Tax (Appeals)-2, Aurangabad for the assessment year 2013-14. The main issue addressed is the impact of Corporate Insolvency Resolution Proceedings (CIRP) pending against the respondent-assessee on the appeal. The Tribunal observed that as per the Insolvency and Bankruptcy Code, 2016, once the CIRP proceedings have commenced, the continuance of pending proceedings is prohibited until the resolution plan is approved by the Adjudicating Authority under Section 31. The decision in Ghanashyam Mishra And Sons case highlighted that claims not part of the resolution plan shall stand extinguished upon approval, preventing any further proceedings on such claims.

The Tribunal emphasized the importance of the resolution plan approval, which freezes the claims provided in the plan and binds all stakeholders. The judgment referred to the 2019 amendment to Section 31 of the I&B Code, clarifying its declaratory nature and retrospective effect. It was noted that all dues, including statutory dues, not part of the resolution plan shall be extinguished upon approval, aligning with the aim of IBC to revive the Corporate Debtor by settling claims against it.

Furthermore, the Tribunal cited the decision of the Jurisdictional High Court in the Murli Industries Limited case, reinforcing the extinguishment of claims not included in the resolution plan upon approval. The judgment highlighted the overriding effect of IBC provisions, emphasizing the certainty provided to the Resolution Applicant regarding future claims against the Corporate Debtor. Ultimately, the Tribunal dismissed the Revenue's appeal, as the claims subject to the appeal were not part of the resolution plan, aligning with the principles established in the Ghanashyam Mishra And Sons case and the Murli Industries Limited case.

In conclusion, the Tribunal upheld the principles of the IBC, emphasizing the extinguishment of claims not part of the resolution plan upon approval, and the prohibition of proceedings against the Corporate Debtor during CIRP. The judgment underscored the need for certainty in resolving claims to revive the Corporate Debtor effectively.

 

 

 

 

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