The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) recently ruled that the dissolved company is exempt from Income Tax Assessment proceedings under Section 54(2) of the Insolvency and Bankruptcy Code, 2016.
The Assessee Company, M/s. Indus Mobile Distribution Pvt. Ltd., was dissolved by the National Company Law Tribunal (NCLT), Chennai Bench, using the powers conferred under Section 54(2) of the Insolvency and Bankruptcy Code, 2016, read with Regulation 14 of IBBI (Liquidation Process) Regulations, 2016, and ordered the dissolution of the corporate debtor, namely the appellant company.
The Registry and the Liquidator directed to serve a copy of the order of the dissolution by the NCLT upon the Registrar of Companies, Chennai, and also to IBBI. The assessee was informed this fact by a letter dated 24.03.2023.
The assessee filed a letter stating that the company had been liquidated and dissolved by the order of the NCLT Division bench, Chennai, on 17-10-2022, and the liquidation process in the case of the assessee company had not been completed, which was evident from the MCA portal, where the status of the company was still under liquidation.
The contention of the revenue was that the liquidation process of the assessee company had not been completed, as indicated by the company’s status still being under liquidation on the MCA (Ministry of Corporate Affairs) portal. The department requested permission to file a revised Form-36 in the name of the liquidator before the ITAT (Income Tax Appellate Tribunal) in Chennai.
The Counsel for the revenue requested a short adjournment to provide the Assessing Officer with additional time to investigate and gather relevant information about the dissolution of the company.
The Bench, consisting of an Advocate Member, G. Manjunatha, and a Judicial Member, Mahavir Singh, noted the NCLT order and observed that the company stood dissolved under Section 54(2) of the Insolvency and Bankruptcy Code, 2016, and once the company was dissolved, the entity had come to an end. No proceedings of any sort could be kept pending once the company was dissolved because the artificial entity had come to an end. The appeal filed by the revenue was dismissed in result.
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