2025 (8) TMI 946 - AT - Income Tax

Income-tax demand against dissolved company for AY 2016-17 extinguished under Section 31(1) IBC as pre-plan liability

M/s Fusion Conbuild (P) Limited Versus ACIT, Circle -9 (2), Delhi

ITAT Delhi (AT) held the income-tax demand against the dissolved/insolvent company for AY 2016-17 is extinguished under Section 31(1) of the IBC because ... Income tax demand against company Insolvent/dissolved - case of the assessee is this that the demand now sought to be enforced by the revenue relate to the period prior to the resolution plan’s approval is, therefore, extinguished by the operation of law as already decided in the case of Ghanashaym Mishra & Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited [2021 (4) TMI 613 - SUPREME COURT] wherein it has been held that all claims, including statutory dues, predating the resolution plan’s approval, stand extinguished. HELD THAT:- . Having regard to the facts and circumstances of the matter and particularly the judgment passed by the Hon’ble Supreme Court in the case of Ghanashaym Mishra & Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited (supra) we find that the demand raised in the instant appeal pertains to the prior period to the approval of the resolution plan i.e. for Assessment Year 16-17 is extinguished under Section 31(1) of IBC. Thus, as the instant appeal becomes infructous the same is dismissed as infructous. The appeal concerns a tax demand for Assessment Year 2016-17 raised under Section 143(3) of the Income Tax Act, 1961, which the assessee challenges on the ground that it predates the approval of a resolution plan under the Insolvency and Bankruptcy Code, 2016 (IBC). The resolution plan was sanctioned by the National Company Law Tribunal (NCLT) under Section 31(1) of the IBC, conclusively ending insolvency proceedings. Citing the Supreme Court's ruling in *Ghanashaym Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd.* (2021) 9 SCC 657, it was held that 'all claims, including statutory dues, predating the resolution plan's approval, stand extinguished.' Therefore, statutory dues and tax liabilities arising before the resolution plan's sanction cannot survive. The tribunal found no contest to this legal position from the revenue and concluded that the tax demand for the relevant period is extinguished by operation of law under Section 31(1) IBC. Consequently, the appeal was dismissed as infructuous since the liability no longer subsists.