The National Company Law Appellate Tribunal on Monday ruled that the liquidator of a Company under liquidation has no liability to fulfill the income tax obligations and therefore, the Income Tax department cannot claim TDS from a liquidator under the Insolvency and Bankruptcy Code (IBC).
The liquidator of S Kumar Nationwide, Om Prakash Agarwal, had filed this Appeal against the order passed by the National Company Law Tribunal Principal Bench, New Delhi where the Authority had declined to issue a direction to the successful bidder and the Income Tax Authority not to deduct 1 % TDS from the sale consideration.
The Appellate Tribunal also ruled that the Liquidator is not required to prepare a balance sheet and profit and loss account and get it audited during the liquidation process.
Judicial Member Justice Jarat Kumar Jain and technical member Dr. Ashok Kumar Mishra while allowing the appeal by the liquidator directed the income tax department to allow a refund and ruled that, “ We are of the view that the Liquidator of a Company in liquidation under the Code is not required to file Income Tax Return, then there is no question of claiming refund of TDS deducted under Section 194 IA of the IT Act.”
With this landmark ruling Liquidation of companies is set to get easier as the liquidator will no longer have to get tax deducted at source while liquidating a bankrupt company.Subscribe Taxscan AdFree to view the Judgment
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