TMI Blog2021 (5) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... l Resolution Plan , the Applicant projected an application under Section 30(6) of the Code, before the Adjudicating Authority praying for its approval as per ingredients of Section 31(1) of the Code and Regulation 39(4) of the CIRP Regulations. This Adjudicating Authority is of the considered view that if any waiver is sought in the Resolution Plan, the same shall be subject to approval by the concerned Authorities. The same view has also been held by Hon ble Principal Bench, NCLT in the case of [ 2018 (9) TMI 55 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI] and therefore, the same is to be setaside, this Tribunal comes to a resultant conclusion that the said Observations are not in the form of imposition of an additional condition thereby opening up the plan in regard to the undecided claims , because of the reason that the Adjudicating Authority is within its limits to express its views/opinion(s). Appeal dismissed. - Company Appeal (AT) (CH) (Ins) No.07 of 2021 - - - Dated:- 17-5-2021 - [Justice Venugopal M] Member (Judicial) And [Kanthi Narahari] Member (Technical) For the Appellant : Mr. Rajashekar Rao, Senior Advocate Mr.Abhishek Jenesenan, Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arry forward and set off of losses in a closely held company shall be allowed only if there is a continuity in the beneficial owner of the shares carrying not less than 51% of the voting power, on the last day of the year or years in which the loss was incurred. However, clause (c) of sub-section (2) to the said section provides that nothing contained in this section shall apply to accompany where a change in the shareholding takes place in a previous year pursuant to a resolution plan approved under the Insolvency and Bankruptcy Code, 2016, after affording a reasonable opportunity of being heard to the jurisdictional principal Commissioner or Commissioner. In the instant case, notices were served to the Principal Commissioner of Income Tax through email and through speed post, but there has been no response. We, therefore, hereby direct that in terms of Section 79(2)(c) of the Income Tax Act, 1961, assessed tax losses of the Corporate Debtor shall be allowed to be carried forward as per provisions of law. 22. However, the Resolution Plan approved shall not construe any waiver to any statutory obligations/liabilities arising out of the approved Resolution Plan and shall be dea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Counsel for the Appellant that if this aspect, is not clarified, hits at the very root of the economic viability of the Resolution Plan and for which reason alone, the Committee of Creditors in its Commercial Wisdom had approved the Resolution Plan with certain specific conditions. Accordingly, this liability which would be in the nature of Operational Debt should also stand extinguished with the approval of the Resolution Plan by the Learned Adjudicating Authority in the light of the ratio laid down by the Hon ble Supreme Court in the Judgment dated 13.04.2021 in Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited, (Civil AppealNo.8129/2019) reported in 2021 SCC Online SC 313. 8. The Learned Counsel for the Appellant vehemently comes out with a plea that it is impossible for the Appellant to implement the plan along with the additional condition mentioned in Para 22 of the Impugned Order and in any event, Para 22 of the Impugned Order seeks to bring alive claims of Statutory Authorities who did not participate in the Resolution Process and therefore cannot be permitted to belatedly open issues that are deemed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate and therefore, should not be burdened with any such liabilities which were not envisaged prior to take over of Business. 13. The Learned Counsel for the Appellant contends that the Adjudicating Authority had failed to take note of the fact that any Statutory Authority which had any dues to recover from the 1st Respondent could have participated in the CIRP and filed its claim form with a Resolution Professional and when the same was not done, making the Appellant liable for obligations and/or liabilities would be an extraneous one. 14. The Learned Counsel for the Appellant points out that the Adjudicating Authority had failed to appreciate that the impugned order to the extent that it refuses to grant the conditions sought for by the Appellant in Clause 9.1 of the Resolution Plan would lead to wide spread absurdity resulting in miscarriage of justice. Appellant s Decisions: 15. The Learned Counsel for the Appellant cites the judgment of the Hon ble Supreme Court dated 13.04.2021 in Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited (Civil Appeal No.8129 of 2019) reported in 2021 SCC Online SC 313, wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , vide Section 247 of the Code, exclusion of the said provision in so far as liquidation proceedings under the Code are concerned forms an exception to Section 178(6) of the Act of 1961, Learned Counsel would also point out that the provisions of Section 220 and 222 of the Act of 1961 do not start with any non-obstante clause and therefore, they would necessarily be subject to the overriding effect of the Code, by virtue of Section 238 thereof. We find merit in this submission. It may be noted that Section 36(3)(b) of the Code indicates in no uncertain terms that the liquidation estate assets may or may not be in possession of the Corporate Debtor, including but not limited to encumbered assets. Therefore, even if the order of attachment constitutes an encumbrance on the property, it still does not have the effect of taking it out of the purview of Section 36(3)(b) of the Code. The said order of attachment therefore cannot be taken to be a bar for completion of the sale effected by the fifth respondent under the provisions of the Code. 19. While rounding up, the Learned Counsel for the Appellant submits that the Adjudicating Authority has travelled beyond the scope of his ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (vi) Conditions to implementation of the Plan for Resolution of 1st Respondent proceed as under: (iv) NCLT shall have directed the CBDT to grant the relief under Section 28(iv), Section 41(1), Section 56, Section 115 JB, and Section 170 or any other applicable provision, against any Income Tax liability arising due to Capital Reduction in the Corporate Debtor, write off/write down/write back of Outstanding Financial Debt and various other liabilities including liabilities pertaining to all the Financial Creditors, Workmen and Employees, Operational Creditors, Other Creditors, etc. (to the extent applicable under Applicable Laws) without any impact on carried forward loss and waive all liabilities whether crystalized or not in respect of Taxes (including interest and penalty) with respect to the period prior to the NCLT Approval Date. (v) NCLT shall have directed the CBDT/DOR to grant the following exemptions / Waivers (i) from applicability of Section 281 of the Income Tax Act, 1961 including obtaining no objection certificate from Income tax authorities in respect of all the pending proceedings and dues (including interest and penalty) of the Company arising for per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther suggestion or objection and may express its own decision. As a matter of fact, the Committee of Creditors ought to record reasons while approving or rejecting one or other Resolution Plan . 26. The Adjudicating Authority is to record analytical subjective satisfaction which is a precondition before according an Approval to the Resolution Plan . In short, the Approval of Resolution Plan is to be judged with utmost care, caution, circumspection and diligence. The threadbare examination of the scheme is to be studied astutely before arriving at a subjective satisfaction by the Adjudicating Authority . 27. Be it noted that a Resolution Applicant cannot object to the Committee of Creditors decision. It is the Committee of Creditors which will approve or disapprove a Resolution Plan given the statutory parameters of Section 30 of the Code. An Adjudicating Authority acts in a Quasi-Judicial fashion and can determine the Resolution Plan . 28. Section 32 of the I B Code speaks of filing of an Appeal. Two main grounds for preferring an Appeal under Section 61(3) of the Code are (i) The Approved plan is in violation of the Provisions of any Law for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Respondent/M/s.Sujana Universal Industries Ltd., [PAN:AACC58630H] had stated as under: On perusal of the records, it was found that the assessee company has carried forward Business losses to the tune of $3,05,47,311/- and unabsorbed depreciation to the tune of ₹ 247,19,38,479/-. As per Section 79(2)(c) of the Income Tax Act, carry forward of the loss may be allowed to accompany where a change in the shareholding takes place in a previous year pursuant to a resolution plan approved under the Insolvency and Bankruptcy Code, 2016. As per Para 11.1, Clause-11, 12 at Page 59, it is mentioned that CBDT Shall grant an exemption to the company from the requirement of amounts in respect of Taxes, including tax deductible at source (TDS) being withhold from payments made to the Company for a period of 1 year from the NCLT approved. As no such provision has been allowed either in the Income Tax Act or Insolvency and Bankruptcy Code, 2016, such exemption may not be granted regarding deduction of TDS. and in respect of any other reliefs sought during the course of Resolution the Income Tax Department , had stated that it may be approved subject to the Provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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