Claim of Income Tax Extinguishes with Post Approval of Resolution Plan by NCLT: Delhi HC [Read Order]

The Delhi High Court held that the claim of income tax is extinguished with post-approval of the resolution plan by the National Company Law Tribunal (NCLT).

The petitioner, Monnet Ispat and Energy Limited has relied upon the order passed by the National Company Law Tribunal, Mumbai Bench [“NCLT Mumbai”] and the certificate of incorporation pursuant to the change of name, issued by the Office of Registrar of Companies.

The order passed by the Commissioner of Income Tax (Appeals) [“CIT(A)”] stated that the demand for Assessment Years (AYs) 2005-06 to 2011-12 has been dropped wherein it was observed that “Since the above-stated demand has been deemed to be permanently extinguished, it is nothing but an empty formality to direct the appellant to approach the AO to place on record the proceedings of NCLT which accepted the Resolution Plan in respect of the appellant company. The AO would then proceed to give effect to the said order in terms of the provisions of section 156A of the IT Act. Para 11 of the order of NCLT, as quoted at Para 4 hereinabove, also notes that all litigations and proceedings against the assessee shall stand abated. Accordingly, in view of the above factors, the present appeals are rendered infructuous and are dismissed as such with the direction to the AO to give effect to the order of the NCLT expeditiously.”

Mr Puneer Rai, senior standing counsel, accepts notice on behalf of the respondents/revenue. Ms Misha, the counsel who appeared on behalf of the petitioner, pointed out the order dated 18.07.2017 passed by the NCLT, Mumbai to bring home the fact that the proceedings qua AYs 2005-06 to 2011-12 have been dropped.  

A division bench comprising Justice Rajiv Shakdher and Justice Girish Kathpalia disposed of the writ petition in terms of the CIT(A) order. The interim order dated 24.12.2019 shall stand vacated and the pending interlocutory applications are closed. 

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