TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 228
X X X X Extracts X X X X
X X X X Extracts X X X X
....fter the admission of the CIRP process by an order of 21.06.2017, as there was no acceptable plan, which was received thereafter, the Corporate Debtor was directed to face the liquidation process by an order dated 24.04.2018. In pursuance to the orders that has been passed by the Ld. Adjudicating Authority, the assets of the Corporate Debtor, M/s. Servalakshmi Paper Limited, were said to have been sold as a going concern basis, by way of an e-auction, that was held on 05.10.2022, showing the realisation of the sale consideration of Rs. 105 Crores. 3. The amount thus realised under the e-auction process, as it stood concluded on 05.10.2022, the sale consideration amount, pending distribution to the stakeholders, was directed to be kept in a fixed deposit with Respondent No.2, the State Bank of India. Obviously, the amount thus deposited in the shape of a fixed deposit with the State Bank of India, was bound to accrue interest upon it as per admissible rates. The Respondent No. 2, before remittance of the amount of interest accruing on the fixed deposit into the liquidation account, had deducted TDS on the same. It is contended by the Appellant, that the said deduction of the TDS ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng IA(IBC)/74(CHE)2025, the Appellant has sought for a prayer to the following effect: This Application has been filed seeking the following reliefs: - "a. To direct the Income Tax Department to return TDS of Rs.1,57,47,550/- deducted till filing this Application along with interest of 12% per annum in the Liquidation Bank account of the Corporate Debtor M/s. Servalakshmi Paper Limited (in Liquidation). b. To direct the State Bank of India further not to deduct the TDS in the Fixed Deposits maintained with them till completion of Distribution to the stakeholders of the Corporate Debtor M/s. Servalakshmi Paper Limited (in Liquidation). c. To provide any other relief which may be found suitable to facilitate the Applicant to discharge his functions effectively and such further orders be passed directions be given as your Lordships may deem fit and proper." 9. While considering the aforesaid application filed by the Appellant, in context of the relief that was sought by the Appellant/Applicant, the Ld. Tribunal observed that, primarily since the relief, which was sought in the application was in context of certain income tax refunds, which was ma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c) in the case of a company, by the managing director thereof, or where for any unavoidable reason such managing director is not able to ^5[verify] the return, or where there is no managing director, by any director thereof ^10[or any other person, as may be prescribed for this purpose]: Provided that where the company is not resident in India, the return may be ^4[verified] by a person who holds a valid power of attorney from such company to do so, which shall be attached to the return: Provided further that,- (a) where the company is being wound up, whether under the orders of a court or otherwise, or where any person has been appointed as the receiver of any assets of the company, the return shall be ^4[verified] by the liquidator referred to in sub-section (1) of Section 178; (b) where the management of the company has been taken over by the Central Government or any State Government under any law, the return of the company shall be ^4[verified] by the principal officer thereof ^8[or]; ^9[(c) where in respect of a company, an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under....
X X X X Extracts X X X X
X X X X Extracts X X X X
....herein the Ld. NCLT has taken a view, that owing to the fact that Section 140 of the Income Tax Act, is silent as to, whether the insolvency professional meant the Resolution Professional during the CIRP or, the Liquidator during the liquidation process, who was required to verify the return. 13. Ld. NCLT observed that looking into the broader interest of the accounting, and where as a matter of fact, interpretation under Section 140 of the Income Tax Act, is required to be done in context of the CIRP, which includes within it liquidation and insolvency procedure, came to a conclusion therein that, the returns were required to be verified. 14. In accordance with the finding, which has been recorded by the Ld. Tribunal in the impugned order, it was observed that, though the Liquidator may not be required to prepare the profit and loss account showing the depreciation and losses etc. of the Corporate Debtor and its assets, and it was not a case before the Ld. Adjudicating Authority, but, under the normal accounting laws, the Liquidator was supposed to prepare an accounting sheet showing the income and expenditures on the basis of the existing balance sheets during the liquidati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....seeking a direction for the Income Tax Department to return the TDS, on the interest which has accrued on the fixed deposit, in order to meet the objective of the relief prayed for in the application. 18. Even if it is presumed, as per the version of the Liquidator, that the Liquidator is not supposed to prepare the profit and loss account, showing the depreciation or losses, etc, as per the implications contained under Section 140 of the Income Tax Act, but still, the Ld. Adjudicating Authority, has rightly observed that to attach fairness to the proceedings the Liquidator was supposed to, at the least, prepare a sheet showing the income and expenditure of the Corporate Debtor under liquidation i.e., during the liquidation period. While disposing of the said application and for the purposes in furtherance of the proceedings for the return of the TDS deposit as it was prayed for in the interlocutory application, the Ld. Tribunal had only directed the Liquidator to submit a simplicitor account as would be relevant for the company under liquidation to be prepared, and there was no positive direction given in the impugned order as to, what would be the accounting documents or the p....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to the nature of the impugned order, which has been passed by the Ld. Tribunal, its not deciding a dispute and rather it takes the shape of an interlocutory order. And since there happens to be no decision till date as such on merits of the application in context of the relief sought for by the Appellant in the application preferred before the Ld. Adjudicating Authority, and rather the decision on the same has been deferred to be taken by the Income Tax Authorities, which would under law be the competent authority to consider as to, whether at all the Liquidator of the company under liquidation falls to be within an exemption as contemplated to be claimed by the Appellant under Section 140 of the Income Tax Act, which would be an aspect which is still to be considered by the Income Tax Department and not by this Appellate Tribunal or by the Ld. Adjudicating Authority. 22. Hence, preference of this company appeal at this stage where the decision on the IA was still left open to be decided before the Income Tax Authorities, the company appeal appears to have been filed in an anticipation of the probable order to be passed by the Income Tax Authorities on the application preferred....
X X X X Extracts X X X X
X X X X Extracts X X X X
....x Authorities, to take a decision on the application, to justify the refund of the TDS, as deducted by the State Bank of India, which has been deposited by them before the Income Tax Authorities, being the deduction of the income tax accruing on the interest at source. Hence, no refund as such of it could have been directed by the Ld. Adjudicating Authority on the TDS based on the relief sought by the Appellant, in the application being IA(IBC)/74(CHE)2025. 26. The contention raised by the Appellant is the converse of the controversy agitated by the Appellant at hand. It has been portrayed by the Appellant as if as per the impugned order, the Income Tax Department has required the Liquidator to file the regular return of the income tax for the assessment years for the purposes of claiming of the refund as against the TDS deductions, ignoring the legal status of the Corporate Debtor in the light of the provisions contained under Section 140 of the Income Tax Act. This may not be the correct interpretation which could be given to the direction that were contained in the impugned order under challenge. Rather, the fact is just the opposite, where the Ld. Adjudicating Authority by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f an act, which might lead to a consequential action that in itself should not be a cause of action for the Appellant to file the instant company appeal. 30. The Ld. Counsel for the Respondent while opposing the company appeal took a stand that, the instant company appeal owing to the nature of directions issued in the impugned order is premature, and is not maintainable for the reason being that, the Appellant has not yet filed the return of income of the Corporate Debtor under liquidation, for seeking the alleged refunds, and he has approached this Appellate Tribunal only under an apprehension, intending to defer his responsibility to file the return of income before he claims a refund of TDS. The Respondents contended and rightly so, that in fact the objective of the Appellant is to cover its inaction of not filing the return and still seeking to get the refund of the TDS even without approaching the Income Tax Authorities by way of seeking direction from the Ld. Adjudicating Authority, which is not the ambit and scope of exercise of powers by the Ld. Adjudicating Authority, and also by way of filing a company appeal which is premature. 31. The issues of whether the Appell....