IBC overrides Income Tax Act for pending tax claims, while related appeals became infructuous after insolvency commencement.

Section 238 of the Insolvency and Bankruptcy Code, 2016 gives the Code overriding effect over inconsistent provisions of the Income-tax Act, 1961, so pending tax claims must be dealt with under the insolvency framework. In view of the commencement of the corporate insolvency resolution process, the connected appeals were treated as infructuous and disposed of for statistical purposes, with liberty to seek reinstatement if permissible in law.

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Issues: (i) Whether the Insolvency and Bankruptcy Code, 2016 overrides the Income-tax Act, 1961 in relation to pending tax claims during insolvency proceedings; (ii) whether the connected appeals had become infructuous on initiation of the corporate insolvency resolution process.

Issue (i): Whether the Insolvency and Bankruptcy Code, 2016 overrides the Income-tax Act, 1961 in relation to pending tax claims during insolvency proceedings.

Analysis: Section 238 of the Insolvency and Bankruptcy Code, 2016 gives the Code overriding effect over inconsistent provisions of other Central and State enactments, including the Income-tax Act, 1961. The Tribunal relied on the settled position that tax claims must yield to the insolvency framework and that such claims are to be dealt with in the manner provided under the Code.

Conclusion: The Insolvency and Bankruptcy Code, 2016 prevails over the Income-tax Act, 1961 in respect of the claims in question.

Issue (ii): Whether the connected appeals had become infructuous on initiation of the corporate insolvency resolution process.

Analysis: In view of the commencement of the corporate insolvency resolution process, the Tribunal treated the pending appeals as no longer requiring adjudication in the ordinary course and held that the parties could seek reinstatement as per law if permissible.

Conclusion: The appeals were held to have become infructuous and were dismissed for statistical purposes.

Final Conclusion: The pending tax disputes were not adjudicated on merits in the appeals, and the matters stood disposed of as infructuous in light of the insolvency proceedings.

Ratio Decidendi: Section 238 of the Insolvency and Bankruptcy Code, 2016 overrides inconsistent provisions of the Income-tax Act, 1961, and pending tax claims must be dealt with under the insolvency framework.

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