2026 (4) TMI 185

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....r opportunity of hearing in the interest of natural justice before dismissing the appeal on the facts and circumstances of the case. 4. The learned CIT(A) has erred in upholding the order of the learned assessing officer as the revenue was seized of the fact that the appellant was going through insolvency proceedings under the IBC, on the facts and circumstances of the case. 5. The resolution plan in the case of the appellant has been approved by the Hon'ble National Company Law Tribunal, Special Bench, Bangalore vide IA No.373/2022 in CP(IB) No.60/BB/2020 under section 9 of the Insolvency Bankruptcy Code, 2016, ("IBC") dt:08.09.2023, thus, there cannot be any demand recoverable from the appellant, on the facts and circumstances of the case. 6. Grounds on disallowance of marketing expenses Rs. 76,66,832/-: a. The authorities below are not justified in disallowing a sum of Rs. 76,66,832/- incurred towards marketing as the same is allowable under section 37 of the Act. b. The expenditure incurred is of revenue in nature and for the purpose of business, thus the expenditure deserves to be allowed on the facts and circumstances of the ca....

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....al before the Ld.CIT(A) and contended that the expenditure disallowed by treating the same as capital expenditure is not correct. The assessee had not appeared before the Ld.CIT(A) and therefore the Ld.CIT(A) had dismissed the appeal on the ground of non-prosecution by the assessee. 4. In the meanwhile the insolvency proceedings were initiated by the Operational creditor u/s 9 of the code for initiation of Corporate Insolvency Resolution Process against the assessee. M/S Maniveera Structure P Ltd was selected as the Resolution applicant and they took over the management of the assessee company. Therefore the present appeal has been filed by the Resolution Applicant on behalf of the assessee company before this Tribunal. 5. At the time of hearing, the assessee initially submitted that the assessee was going through the insolvency proceedings under the Insolvency Bankruptcy Code and a resolution plan was also approved by the Hon'ble National Company Law Tribunal, Special Bench, Bengaluru and therefore the demands could not be recoverable from the assessee. The Ld.AR further submitted that even though the fact of the insolvency proceedings are informed to the revenue as early as....

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....and an affidavit was filed clarifying the treatment of Government dues, in view of the judgment in the matter of State Tax Officer vs Rainbow Papers Limited. It was stated that no claims were submitted by any of the statutory authorities in the relevant claims form prescribed by the Code despite intimations sent to the relevant statutory authorities, as well as in response to the public Announcement dated 27.04.2021 for the invitation of claims. Further, it is submitted that the resolution plan provides for treatment of statutory dues under Clause 21, Part D of the Resolution Plan. The Resolution Applicant has assumed the liquidation value of the Company for the purpose of this Resolution Plan to be NIL. As a result, under the Resolution Plan, the value to be paid the Statutory Authorities is NIL in accordance with the liquidation waterfall provided under Section 53 of the Code is NIL. Accordingly, the requirement of Section 30(2)(b) of the Code to pay at least liquidation value to Operational Creditors does not apply in this case. Further, Clause 21.1. of the Resolution Plan states that as on the date of submission of resolution plan, no claims were received from Statutory Authori....

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....e 2nd respondent submitted its revised resolution plan dated 03.08.2020. in the Plan Schedule 4 deal with financial proposal for all stakeholders and Schedule-6 deal with payment to creditors and cost of resolution plan and means of finance. Sub-clause- (iv) of Schedule 4 a provision is made to pay a sum of Rs. 8 Crore towards a Financial Creditors Debt. Further, a provision is made to homebuyers who form part of Financial Creditors. Sub clause (xii) of schedule 4 of plan dealt with proposal for operational creditor. It is stated that the total claims filed by Operational Creditors of the company is for an amount of Rs. 3,03,05,776/- out of which claims aggregating to Rs. 99,50,075/- have been verified and admitted for the purposes of CIRP by resolution professional. It is also stated that claims in relation to workmen's dues as verified and admitted by the resolution professional is shown as nil. 37. Even in plan the outstanding government dues, taxes etc. which was admitted as operational creditor, nil payment has been proposed under the plan towards payment of any Government dues, taxes etc. With regard to the payment of operational creditor sub reads as: the liquidatio....