TaxTMI 
TaxTMI 
2019 (6) TMI 1503
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....e:- (a) This Tribunal admitted the Petition filed by IDBI Bank Ltd / Financial Creditor under section 7 of the 1B Code, 2016 against the Corporate Debtor / Lanco Infratech Limited on 07.08.2017 and initiated Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Subsequently this Tribunal passed a liquidation order dated 27.08.2018 against the Corporate Debtor. (b) That subsequent to the order of liquidation of the Corporate Debtor on 27.08.2018, the Applicant being a former employee of Corporate Debtor submitted his claim of salary and other benefits before the Liquidator (Respondent No. 1 herein) vide FORM-E application dated 14.09.2018 for an amount of Rs. 30, 12,837.56 (Rupees Thirty Lakhs Twelve Thousand Eight Hundred and Thirty Seven and Fifty Six Paise Only). It is averred the Applicant did not receive salary for the months of June, 2017 and July, 2017 and that he reserves right to claim the salary amounts which are payable by Liquidator to him. (c) That when Applicant received a notice dated 29.12.2018 from Commissioner of Income Tax, Hyderabad with regard to delay in payment of TDS, he sent an e-mail dated 18.01.2019 to Liqu....
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....started on 27.08.2018 and Respondent No.2 took charge of the Corporate Debtor Company only on 07.08,2017. (c) It is contended prior to commencement of CIRP, the Corporate Debtor deducted TDS from the salary of the Applicant but could not deposit the same due to its financial constraints. Further contended that for the salaries paid by RP/Liquidator, he ensured that the TDS, PF and all other applicable statutory dues are deposited within the prescribed time period with the concerned authorities. (d) The non-deposit of TDS being complained of by the Applicant is for salaries paid to him for the period up to 31.08.2016 on which date he attained superannuation i.e. much prior to commencement of CIRP. (e) That the Corporate Debtor defaulted in +depositing TDS not only of the Applicant's but also in case of many other employees. The RP / Liquidator keeping in mind the fact that these are legitimate claims payable to the Income Tax Department he admitted these dues as operational claims against the Corporate Debtor. Thus, the amount required to be deposited as TDS is an Operational Debt. As per provisions contained in Section 35 of the Code the Liquidator pr....
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....claim of the Applicant by the Liquidator, he could not find any basis for the claim of interest at the rate of 15% per annum and accordingly this amount was rejected. Further, from the principal amount claimed, the Liquidator verified the claim for an amount of Rs. 23,32,884/- and the same was admitted. For the balance amount of Rs. 10,746/- the Liquidator requested for additional documents from the Applicant so as to suitably verify the claim and this amount at present is kept under verification. (i) The Liquidator thus prayed this Tribunal to dismiss the Application as premature and not maintainable. 4. I heard both sides. The Applicant is ex-employee of Corporate Debtor. He has filed this Application seeking a direction to the Liquidator and the Corporate Debtor under Liquidation to pay the outstanding TDS deducted from the salary of the Applicant amounting to Rs. 3,58,737/- and also issue Form -16 to the Applicant. 5. The case of Applicant, CIRP started against Corporate Debtor by order dated 07.08.2017 and liquidation proceedings started against Corporate Debtor by order dated 27.08.2018. The Applicant submitted claim before the Resolution Professional in respec....
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....nt. The Corporate Debtor failed to deposit the TDS amount. The Liquidator has also admitted that not only in the case of Applicant but also in the case of other employees, TDS was not deposited and therefore Form-16 could not be issued. 8. Whatever tax due to the Government, the same to be paid out of the money realised from the sale of the assets of Corporate Debtor during Liquidation and it is to be paid in terms of water fall mechanism provided under Section 53 of IBC. Apart from this water fall mechanism, the tax payable to the IT Department is nothing but an operational debt as was held by NCLAT in Company Appeal (AT) No. 205 of 2017 in the matter of Pr. Director General of Income Tax (Admn. & TPS) versus M/S. Synergies Dooray Automotive Ltd. & Ors dated 02.08.2017. The IT Department can make a claim before the Liquidator with regard to the TDS collected from the Applicant to be treated as operational debt or in the alternative IT Department to make the claim before the Liquidator regarding TDS collected from the Applicant. In other words, IT Department has to submit the claim before the Liquidator in respect of the tax due (TDS) from the Applicant. 9. It is the Corporat....
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....th Paliwal, along with Shri L. Aravind Reddy, Ms. Rubaina S. Khatoon and Ms Radhika, Advocates. Per: Shri Ratakonda Murali, Member (Judicial) Heard on: 05.03.2019, 27.03.2019, 10.04.2019, 02.05.2019 ORDER 1. Under consideration is the Application filed under Section 33(5), 35 (1) (k) read with Section 60 (5) of IBC, 2016 and Rule 11 of NCLT rules, 2016, seeking direction to liquidator to keep on priority, the funds required for payment of compounding fees on behalf of the Corporate Debtor before concerned authorities and file appropriate application in Criminal Case No.530366/2016 before Additional Chief Metropolitan Magistrate (Spl Acts) Hon'ble Tis Hazari Court, New Delhi to close the proceedings and include such expense in Liquidation costs; or alternatively permit the Applicant to pursue and prosecute the Criminal Case No. 530366/2016 pending before Additional Chief Metropolitan (Spl. Acts.) Hon'ble Tis Hazari Court, New Delhi and pay compounding fees as directed by Additional Chief Metropolitan Magistrate. Further the cost incurred by Applicant to be treated as part and parcel of the Liquidation costs and seek further direction to Liquidator to ....
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....tor paid the TDS backlog of Rs. 39.99 Crores out of the total TDS amount of Rs. 72.02 Crore along with applicable interest of Rs. 2.17 Crore. 6) It is averred, the Corporate Debtor received a show cause notice from the Assistant Commissioner of Income Tax (ACIT) (Respondent No.4 herein) on 03.09.2015 u/s 2(35) alleging default of Rs. 11,58,946/- being TDS deposited after due date. But since the Corporate Debtor had paid all the TDS and applicable interest, it requested Income Tax Department for the data verification of the same for accuracy and justification for the demand. After verification of the data provided by the Income Tax Department, the Corporate Debtor noticed some errors in the dates, which it corrected and submitted vide letters dated 22.09.2015 and 20.10.2015 to the Income Tax Department and requested the said Department to drop the interest demand because of the fact that, as per the corrected data there was no delay on which the interest was already calculated and paid. It is the case of Corporate Debtor that the IT Department did not take the rectified data into consideration and did not consider the request of the Corporate Debtor to drop the interest dem....
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.... fee, the prosecution proceedings would be closed. But it is stated that the RP did not act on the compounding application. 11) It is further case of Applicant that he submitted an Application dated 30.10.2018 to the Principle Commissioner of Income Tax (TDS), New Delhi under Section 279 (2) of the Income Tax Act 1961 seeking compounding of offence under Section 276B of the said Act. The Commissioner of Income Tax (TDS), New Delhi (Respondent No.3 herein) vide its letter dated 29.11.2018 rejected the compounding Application of the Applicant stating that the application for compounding under Section 279 (2) of the Income Tax Act, 1961 was filed after twelve months period from the date of filing of prosecution complaint by Income Tax Department. The Applicant subsequently in his individual capacity made a Representation to the Principal Commissioner of Income tax on 29.11.2018 stating that Central Board of Director Taxes had revised the guidelines for compounding of offences and said guidelines do not prescribe any limitation for filing application for compounding. The Applicant further stated in the said Representation that the Hon'ble Apex Court in various judgements f....
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....against compounding fee by the Applicant to be included in the Liquidation costs. 3. Counter / reply is filed by Resolution Professional. Averments in the Counter in brief are:- (1) The Liquidator avers that the reliefs sought by the Applicant pertains to a period which is prior to commencement of the CIRP of the Corporate Debtor i.e. prior to 07.08.2017 and subsequently this Tribunal passed order of liquidation on 27.08.2018. Thus, it is the case of Liquidator that the entire cause of action for the prosecution initiated by the IT Department occurred prior to the initiation of CIRP and that the prosecution did not arise out of / in relation to the CIRP or liquidation of the Corporate Debtor. (2) Further, the Liquidator avers that Sections 33 (5), 35 (1) (k) R/w Section 60 (5) of the Code under which the Application is filed, have no applicability on the present facts and as such the Application deserves to be dismissed. (3) The Liquidator reiterates that Section 33 (5) of the Code provides that once an order of Liquidation is passed, no suit or other legal proceedings to be instituted by or against the Corporate Debtor. It is the case of Liquidator th....
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....r of the Company can only represent the Corporate Debtor and address the issues relating to the Company. (2) It is totally false to mention that Corporate Debtor failed to deposit the TDS. Though there was some delay in depositing the TDS due to circumstances beyond the control of the Applicant, the same was deposited with the IT Department after some delay. (3) It is contended that the prosecution instituted by the Department of Income Tax is in relation to the activities of Company and the entire averments are related to the statutory obligations of the Company. The show cause notice as well as criminal complaint clearly discloses the name of the Company and the Applicant herein denies the averment made by the Resolution Professional that the prosecution is prior to initiation of CIRP and that the Liquidator is obligated to deal with all aspects of the assets and liabilities of the Company. (4) The Applicant denies the averment made by Resolution professional that Section 33 (5) and 35 (1) (k) R/w Section 60 (5) of the Code have no applicability to this case. It is contended, after the commencement of liquidation, any procedure and relief sought would b....
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....the erstwhile management that the Corporate Debtor eroded all its value to the point where today it needs to be liquidated. It is stated, the erstwhile management under its watch protected to the best of its ability, the value of the Company in spite of multiple challenges which were beyond the control of the erstwhile management. Hence, the Applicant again prayed this Tribunal to allow the reliefs as sought for. 5. I heard both sides. The Application is filed on behalf of Applicant who was the then Managing Director of Corporate Debtor now represented by his GPA Holder Shri Cherukuri Anjaneyulu. The case of Applicant that IT Department filed criminal case against Corporate Debtor Company and he is appearing in the said criminal case bearing No. 530366/2016 pending before Additional Chief Metropolitan Magistrate (Special Acts) Tis Hazari Court, Delhi. He is seeking relief either to direct the Liquidator appointed for the Corporate Debtor Company, which is under Liquidation, to file an Application for compounding and in the alternative to permit the Applicant to pay compounding fee if any payable as imposed by Additional Chief Metropolitan Magistrate and the same may be reimburse....
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....btor, which is under Liquidation, the compounding fee if any payable is to be paid by the Liquidator. The default was committed by the Corporate Debtor. Whether it relates to the period prior to CIRP or after starting of CIRP, the responsibility nevertheless lies with the Corporate Debtor. Section 35 (1) (k) of IBC provides that if proceedings are initiated against Corporate Debtor, it is the duty of the Liquidator to defend any suit, prosecution or other legal proceedings, civil or criminal, in accordance with the provisions of the Code. So it is very clear, under Section 35 (1) (k), the Liquidator is to defend the proceedings whether civil or criminal since proceedings are already started against Corporate Debtor and the then Managing Director, the Applicant herein is attending the court in connection with prosecution launched against the Corporate Debtor, the expenses if any incurred for payment of compounding fee shall be made by the Liquidator. 9. The Applicant in the alternative is seeking a direction to the Liquidator to make a provisions for reimbursement of any compounding fee paid by the Applicant since it is the duty of the Liquidator during Liquidation to defend the ....
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....ates. Per: Hon'ble Shri RatakondaMuraIi, Member (Judicial) Heard on: 10.06.2019 ORDER 1. This Application is filed by Applicant for a direction to refund a sum of to the applicant and to direct the Resolution Professional not to include the sum of Rs. as part of assets of the corporate debtor. 2. Brief averments of the application: a. The applicant has filed the present application for the reliefs of declaration that the invocation of the Bank Guarantee by the Resolution Professional vide Letter dated 24.04.2018 received by the Applicant's Bankers on 18.05.2018 is illegal, and against the provision of the Bank Guarantee and set aside the same. b. The applicant avers that the fact of application is communicated to the Resolution Professional, but the Resolution Professional had invoked the Bank Guarantee and the Bankers have credited the sum of to the account of corporate debtor. c. It is averred that the invocation itself is illegal, against provisions of the Code and after the CIRP period is over, the applicant is entitled to restitution and the Resolution Professional is bound to return the sum of to the applicant and ....