TaxTMI 
TaxTMI 
TaxTMI 
2024 (10) TMI 992
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....neously and/or perversely held that tax was deductible at source under Chapter XVII-B of the Income Tax Act, 1961 on the payment of management service fee of Rs. 3,52,76,000/- during the relevant assessment year 2009-10. 2) For that the Commissioner of Income Tax (Appeals) erred in disallowing the management service fee of Rs. 3,52,76,000/- under section 40(a)(ia) of the Income Tax Act, 1961. 3) For that without prejudice to the aforesaid the Commissioner of Income Tax (Appeals) failed to consider that since tax was deducted at source on the management services paid and the same was duly deposited within the due date, the deduction should have been allowed either in assessment year 2009- 10 or in the subsequent assessment year 2010-11. Royalty 4) For that the Commissioner of Income Tax (Appeals) erroneously and perversely held that tax was deductible at source under Chapter XVII-B of the Income Tax Act, 1961 on the provision for royalty of Rs. 1,02,87,073/- during the relevant assessment year 2009-10. 5) For that the Commissioner of Income Tax (Appeals) erred in disallowing the provision for royalty of Rs. 1,02,87,073/- under section 40(a) of the Income Tax Act, 1961. 6....
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....t year as expenditure incurred towards sale of land while computing capital gains as per Section 48 of the Income Tax Act, 1961. Initiation of penalty proceedings under section 271(1)(c) of the Act 7) For that, the Ld. CIT(A) has erred in treating the initiation of penalty proceedings under section 271(1)(c) of the Act as premature at this stage ignoring the fact that the Appellant has neither furnished inaccurate particulars of income nor concealed its income. That the Appellant craves leave to add, alter, supplements, amend, modify, substitute and/or rescind the grounds hereinabove before or at the time of hearing of this appeal. 3. We would first take up appeal for the Assessment Year 2009-10 which has been preferred by the assessee challenging the order dated 28.02.2018, passed by the Ld. CIT(A) whereby, inter alia, the Ld. CIT(A) had partly allowed the appeal of the Assessee against the Assessment Order, dated 31.03.2015, passed under Section 263/143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). Brief facts of the case are that McNally Sayaji Engineering Limited ('MSEL' or 'the Appellant') is the manufacturer of Crushing, Screening, Milling, Mat....
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....nsolvency and Bankruptcy proceedings which are carried out under the Insolvency and Bankruptcy Code, 2016. Vide order sheet dated 22.01.2024, the Bench had ordered as under: The present appeals are filed by the assessee agitating certain disallowances made by the Assessing Officer. It is to be noted that during the pendency of the present appeals, the assessee company approached the National Company Law Tribunal (NCLT) for initiation of Corporate Insolvency Resolution Process and thereby, a moratorium had been declared by the NCLT u/s 14 of the Insolvency and Bankruptcy Code, 2016. The Id. Counsel for the assessee has further submitted that the insolvency resolution plan has been approved by the NCLT, Kolkata Bench, vide order dt. 24/02/2023 and thereafter, the company has been acquired by Tega Group. Now, the question which is genuinely raised in many appeals before us is that, at the time of initiation of insolvency and corporate insolvency resolution process and thereafter appointment of resolution professional to manage the affairs of the company as per the provisions of the Insolvency and Bankruptcy Code, 2016, can the statutory Income-tax liability of the applicant company ....
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....also to be seen as to whether Section 178 of the Income Tax Act, 1961 (in short 'the Act'), covers the interim resolution professional appointed by the NCLT in the definition liquidator and if 50, and scope whether statutory taxes can of be recovered from such liquidator for non-performance of his duties as per the provision of Section 178 of the Act. The ld. D/R is directed to take up the matter with the higher authorities and get proper instructions in this respect. The ld. A/R is also directed to come prepared and address this bench on the above issues. Both the parties will be heard on the above issues on the next date of hearing. Case adjourned to 26/03/2024. Copy of this order be supplied to the parties free of cost. Ordered accordingly." 4.1 No further submissions were made on the subsequent dates of hearing. However, the Ld. AR filed a copy of the order dated 24th February, 2023 of the NCLT, Kolkata Bench, Court-I, Kolkata in IA(IB) No. 1214/KB/2022 in CP(IB) No. 131/KB/2020 in the matter of ICICI Bank Limited (Financial Creditor) Versus McNally Sayaji Engineering Limited (Corporate Debtor) and in the matter of Jitendra Lohia, Resolution Professional of McNally....
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.... Debtor including damages on account of termination of such contracts pursuant to this Resolution Plan or claims which are in the nature of recovery, disgorgement, penalty, fees or recoupment of loss, shall be deemed to have been extinguished upon approval of this Resolution Plan, without any liability whatsoever on the Corporate Debtor or the Resolution Applicant. There are other reliefs and concessions mentioned in respect of suits, inquiries and investigations and also for the period prior to the transfer date, all noncompliance breaches and defaults of the corporate debtor shall be deemed to be waived by the concerned governmental authorities and immunity shall be deemed to have been granted to the corporate debtor from all proceedings and penalties under all applicable laws for any noncompliance for the period prior to the transfer date and no interest penal implications shall arise due to such noncompliance, default, breach prior to the transfer date. Relief and concession relating to Taxation are further specifically provided at S.Nos. 46 to 51. At S.No. 60 it is mentioned that the Resolution Applicant shall have the right to recover and take necessary action of all actionab....
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....ct by virtue of any such law. Thus, the IBC has overriding effects over other laws and hence the appellate proceedings pending in this Tribunal cannot continue and are liable to be dismissed on account of being infructuous and in violation of the provisions of the IBC after approval of the Resolution Plan by the NCLT, more so when the plan has not been disputed by the Revenue in any court of law and has attained finality. 5. Similar finding has been given in several judicial pronouncements in this regard. It has been held in the case of Maruti Koatsu Cylinders Ltd. v. Deputy Commissioner of Income-tax [2024] 165 taxmann.com 332 (Gujarat) that when the NCLT has approved the application filed under section 13(6) of IBC, 2016 and resolution plan submitted by the applicant was approved, the Assessing Officer would not have any jurisdiction to reopen the assessment with regard to the assessment year 2019-20. [Para 6] 5.1 It has also been held in Asian Colour Coated Ispat Ltd. v. Asstt. Commissioner of Income-tax. [2024] 165 taxmann.com 641 (Delhi) as under: 21. Suffice it to observe that it is not the case of the respondents that the NCLT has been moved for the purposes of recall of....
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.... proceedings in respect of any claim for any such due. No proceedings in respect of any dues relating to the period prior to the approval of the resolution plan can be continued or initiated. [Para 15] * In this clear view of the matter, there can be no manner of doubt that the Impugned Proceedings initiated by the revenue and sought to be defended as if they relate to liabilities that somehow emerge after the CIRP, are wholly misconceived and untenable. The resolution plan, upon its approval, brought a quietus to all claims pursued or capable of being pursued by the revenue against the petitioner for any operation prior to the CIRP. The stance of the revenue in the reply affidavit, namely, that if the tax claim amount had not been crystallised, would be future dues and not past dues, is totally untenable. Ghanshyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited 2021 SCC Online SC 313 makes it clear that the continuation of existing proceedings and the initiation of new proceedings, as they relate to operations prior to the CIRP, are totally prohibited after the approval of the resolution plan. Consequently, nothing would survive insofar as the ....
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....ent, any State Government or any local authority to whom a debt in respect of payment of dues arising under any law for the time being in force. The Supreme Court in the matter of Ghanashyam Mishra & Sons (P.) Ltd. V. Edelweiss Asset Reconstruction Co. Ltd. [2021] 126 taxmann.com 132/166 SCL 237 (SC) [2021] 9 SCC 657 has considered the scope of section 31 (1) of the IBC and has held that once the resolution plan is sanctioned under section 31(1) of the IBC, the claims provided in the plan will stand frozen and all such claims which are not part of the plan will stand extinguished. [Para 9.2] * The law is well settled that on the approval of the resolution plan in terms of section 31 of the IBC, the dues including the statutory dues of the Government or local authority, if not part of the resolution plan, gets extinguished and no proceedings in respect thereof for a period prior to the date of approval under section 31 would continue. The decision of the Calcutta High Court in West Bengal State Electricity Distribution Company Ltd. V. Sri Vasavi Industries Ltd. [2022] 143 taxmann.com 96/174 SCL 199 2022 (7) TMI 580 - CALCUTTA HIGH COURT makes it clear that any claim not made durin....