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2019 (1) TMI 1813 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to pay the outstanding debt with interest - financial debt or not - existence of debt and dispute or not - HELD THAT:- The Definition as prescribed u/s 5(8) of the Code is that a ‘Financial Debt’ has a component of ‘Interest’ and in other words has a component of “Time Value of Money”. In my view, the present position of the transaction is thus coming within the definition of Financial Debt as defined u/s 5(8) of the Code. An entry recorded in the books of accounts is to be narrated in the light of the surrounding circumstances and the action taken either by the depositor or by the receiver. In this case, an important fact cannot be ignored that on receiving the amount in question the Debtor Company had treated the impugned amount as a loan and thereupon undisputedly deducted Tax at Source on payment/ accrual of Interest. Form 26AS is submitted as an evidence depicting clearly the payment was towards Interest. Under the provisions of the Income Tax Act either on payment or on accrual of interest it is the responsibility of the person to deduct TDS at the time of payment or on passing the credit entry as interest in its books of accounts. Keeping this provision of Income Tax Act in mind, the Debtor Company had deducted the TDS and issued a certificate on Form 26-AS, already furnished by the Petitioner as a part of the evidence. Because of this reason a conclusion can be drawn that the Respondent Company has unequivocally recorded the transaction in question as a Financial Liability. In the present case, the cause of action had arisen when the Debtor company had refused to return the loan. However, in the Civil proceedings the cause of action is in operation when the litigating parties file a suit of divorce. Both the legal proceedings are independent having no nexus with each other, therefore, can be independently adjudicated by two different judicial forum. This Bench is of the view that the transaction is within the definition of Financial Debt, hence the Petition u/s 7 deserves to be ‘Admitted’ - Application admitted - moratorium declared.
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