Income Tax Department vs Shikhar Chand Jain Liquidator Of The ...

IN THE MATTER OF: Income Tax Department ...Appellant Versus Shikhar Chand Jain Liquidator of the Corporate Debtor of Hariom Rice Mill Pvt. Ltd. & Ors. ...Respondents

Present: For Appellant : Ms. Maithili Mehta, Advocate. For Respondents : Mr. Sandeep Bajaj and Ms. Aakanksha Nehra, Advocates for R-1. Mr. Sanwal Tibrewal, Advocate for R-3.

ORDER

(Hybrid Mode)

15.05.2024 : Heard Counsel for the Appellant as well as learned Counsel

appearing for the Liquidator.

2. This appeal has been filed by the Income Tax Department, challenging

the order dated 11.10.2023 passed by the Learned Adjudicating Authority

(National Company Law Tribunal, Cuttack Bench, Cuttack) in IA (IBC)

No.196/CB/2023 in CP (IB) No.249/CB/2020.

3. The brief facts of the case are that the Corporate Insolvency Resolution

Process (CIRP) against the Corporate Debtor M/s. Hariom Rice Mill Pvt. Ltd.

commenced on 09.06.2021; no Resolution Plan having been approved; the

Liquidation was ordered by the Adjudicating Authority; before the Liquidator

the Appellant has sent their claim in Statutory Form-C; certain clarifications

were sought by the Liquidator; the Liquidator has informed about the

Appellant about the admission of their claim of Rs.1,35,64,98,726/-;

subsequently, the e-Auction was held by the Liquidator and one Rashik Bihari Food Pvt. Ltd. was declared as a Successful Bidder; Letter of Intent (LoI) was

issued on 03.02.2023; the Income Tax Department was also informed about

the e-Auction and it was also informed that the claim of the Appellant has

been admitted which shall be considered as per the waterfall mechanism; an

application was filed by the Hariom Rice Mill Pvt. Ltd. seeking permission of

the Adjudicating Authority to exclude and conclude the Liquidation of the

Corporate Debtor as a going concern under the Liquidation and certain reliefs

and concessions were asked for.

4. Adjudicating Authority in paragraph 2 has noticed the details of the

application and after hearing the parties, directions have been issued in

paragraph 4.

5. The Appellant is aggrieved by directions in paragraph 5.6 and submits

that with regard to carry forward, the provisions of Section 79(2) of the Income

Tax Act, 1961, (hereinafter referred to as 'The Act') have not been taken care

of.

6. Learned Counsel for the Respondent submits that reliefs and

concessions which have been granted are in accordance with law and as per

Section 79(2) of the Act and no prejudice can be said to have been caused to

the Income Tax Department.

7. We have considered the submissions of Counsel for the parties and

perused the record.

8. In paragraph 5.6, Adjudicating Authority has directed:

"5.6 Change in the The unpaid shareholding of the liabilities/existing share Corporate Debtor as a capital which are to be result of the CD being sold extinguished, are to be as a going concern and credited into "Capital Comp. App. (AT) (Ins.) No. 1625 of 2023 2 of 4 pursuant to approval by Reserve" in accordance with the Adjudicating Authority applicable Indian Accounting leading to such change in Standards; and the shareholding shall not accumulated losses, if any, result in lapse of any carry as per the balance sheet forward losses and/ or prior to the date of unabsorbed depreciation acquisition will have to be in the books of the adjusted/set off as against Corporate Debtor as on such "Capital Reserve". The takeover date. that are balance amount losses, if brought forward under the any, can only be considered provisions of section 79 for carry forward as per read with section 2(18) provisions of Sections 79(2) Income-tax Act,1961. of the Income Tax Act, provided a reasonable opportunity is given to the Principal Commissioner of Income Tax."

9. The Adjudicating Authority in the column which contains the order of

the Adjudicating Authority has clearly mentioned "the balance amount losses,

if any, can only be considered for carry forward as per provision of Section 79(2)

of the Income Tax Act, 1961, provided a reasonable opportunity is given to the

Principal Commissioner of the Income Tax".

10. When we look into the said direction, it is clear that the Adjudicating

Authority itself has not passed any order under Section 79(2) of the Act and

as per the Section 79(2), the carry forward has to be looked into and

considered by the appropriate Assessing Authority in accordance with law.

11. We, thus are of the view that no grievance can be raised with regard to

the above order of the Adjudicating Authority as noted in paragraph 5.6.

12. Counsel for the Appellant submits that she has e-filed the Rejoinder on

14.05.2024.

13. The apprehension of the Appellant that the Adjudicating Authority has

allowed the carry forward under Section 79(2) of the Act is misconceived.

Comp. App. (AT) (Ins.) No. 1625 of 2023 3 of 4

14. We, thus are of the view that no grounds have been made out to

interfere with the impugned order, with the clarifications as above, we dispose

of this Appeal.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

[Arun Baroka] Member (Technical) himanshu/nn

Comp. App. (AT) (Ins.) No. 1625 of 2023 4 of 4