2022 (9) TMI 1531 - HC - Income Tax

Appeal on Section 80-IA of Income Tax Act dismissed; NCLT resolution plan under IBC renders case moot, questions left open.

Principal Commissioner of Income Tax-4, Kolkata Versus M/s. Tantia Construction Limited

The Calcutta HC dismissed the appeal concerning the interpretation of Section 80-IA of the Income Tax Act, 1961, due to the approval of a resolution plan ... Section u/s 80IA - insolvency proceedings - Assessee submitted that the application filed by the financial creditor under Section 7 of the Insolvency & Bankruptcy Code 2016 (IBC) before NCLT, Kolkata was admitted for initiating the corporate resolution process in respect of assessee company and the NCLT by order dated March 13, 2019 declared moratorium for the purposes of referring to in section 14 of the IBC. NCLT has approved the resolution plan submitted by the company on 24th February, 2020. Since the resolution plan has already been approved, the instant appeal has become infructuous and accordingly stands dismissed without any order as to costs. Further in the assessee’s own case appeal filed by the revenue for the other assessment years were also dismissed on similar grounds. Issues involved:1. Interpretation of Section 80-IA of the Income Tax Act, 1961 with retrospective effect.2. Impact of the Insolvency & Bankruptcy Code, 2016 on ongoing legal proceedings.3. Dismissal of appeal due to approval of resolution plan by the National Company Law Tribunal (NCLT).Interpretation of Section 80-IA of the Income Tax Act, 1961:The appeal before the Calcutta High Court revolved around the correct application of Section 80-IA of the Income Tax Act, particularly focusing on the explanation under sub-section 13 with retrospective effect from 1st April, 2000. The court heard arguments from both parties' counsels, Mr. Aryak Dutta for the appellant and Mr. Avra Mazumder assisted by Mr. Binayak Gupta for the respondent. The respondent's counsel highlighted the retrospective effect of the provision and its application in the case at hand. The court was tasked with determining whether the tribunal's interpretation and application of Section 80-IA were accurate in the given circumstances.Impact of the Insolvency & Bankruptcy Code, 2016:The respondent's counsel brought to the court's attention the proceedings under the Insolvency & Bankruptcy Code, 2016 (IBC) initiated by a financial creditor. The National Company Law Tribunal (NCLT) in Kolkata had admitted the application under Section 7 of the IBC, leading to the declaration of a moratorium on the corporate resolution process as per Section 14 of the IBC. Subsequently, the NCLT approved the resolution plan submitted by the company, rendering the ongoing appeal before the High Court infructuous. The dismissal of the appeal was based on the fact that the resolution plan had been approved, and thus, the matter was concluded due to the impact of the IBC proceedings.Dismissal of appeal due to NCLT's approval of resolution plan:The High Court noted that in a similar vein to the present case, appeals filed by the revenue for other assessment years in the assessee's case had also been dismissed on comparable grounds. Consequently, the court dismissed the instant appeal without any order as to costs, as the resolution plan had been approved by the NCLT, making the appeal moot. The substantial questions of law raised in the appeal were left open for future consideration, given the dismissal based on the resolution plan's approval and the subsequent impact on the legal proceedings.This detailed analysis of the judgment before the Calcutta High Court provides a comprehensive understanding of the issues discussed, the arguments presented by the counsels, and the court's decision based on the interpretation of relevant legal provisions and the impact of external factors such as the Insolvency & Bankruptcy Code, 2016.