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NCLT approval under Insolvency Code prevails over Income Tax Dept appeal The appeal by the revenue against the CIT(A) order for AY 2010-11 was dismissed due to the acceptance of the resolution plan by NCLT, which had binding ...
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NCLT approval under Insolvency Code prevails over Income Tax Dept appeal
The appeal by the revenue against the CIT(A) order for AY 2010-11 was dismissed due to the acceptance of the resolution plan by NCLT, which had binding effects on the Income Tax Department. The NCLT's approval under the Insolvency and Bankruptcy Code, 2016 was deemed superior, leading to the rejection of the revenue's appeal and the assessee's Cross Objection. The court's decision on 19th February 2021 resulted in the dismissal of both appeals.
Issues: Appeal by revenue against CIT(A) order for AY 2010-11, acceptance of resolution plan by NCLT, binding nature of NCLT order on Income Tax Department, dismissal of appeal and cross objection.
Analysis: The judgment pertains to an appeal by the revenue and a Cross Objection by the assessee against the order of Ld. CIT(A)-1, Kolkata for the assessment year 2010-11. The Ld. AR of the assessee highlighted that the NCLT, Kolkata Bench had accepted the resolution plan in the matter of Insolvency and Bankruptcy Code, 2016 for the assessee. The resolution plan included provisions regarding waiver approval for statutory dues, liabilities, litigations, disputes, and appeals with the Income Tax Department. The NCLT's acceptance of the resolution plan under section 31(1) of the IBC, 2016 was emphasized, stating that the order is binding on various stakeholders involved in the Resolution Plan. Citing the case of PCIT Vs. Monnet Ispat & Energy Ltd., it was argued that the provision of IBC, 2016 holds supremacy. Consequently, the Ld. AR contended that the revenue's appeal could not be pursued further due to the NCLT-approved resolution plan, leading to the dismissal of the appeals.
Moving on to the assessee's Cross Objection, it was noted that the Ld. AR chose not to press the same in light of the NCLT order accepting the resolution plan. Therefore, the Cross Objection of the assessee was also dismissed. In conclusion, the judgment resulted in the dismissal of both the revenue's appeal and the assessee's Cross Objection. The order was pronounced in the open court on 19th February 2021.
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