Income tax debts are defined as operational debts
Facts and Issue of the Case
1. Whether on the facts and in circumstances of the case, Ld. CIT(A) 1s justified in deleting the addition of Rs. 2,51,57,215/- made on account of disallowance of bogus claim of depreciation.
2. Whether on the facts and in circumstances of the case, Ld. CIT(A)ts justified in deleting the addition of Rs. 59,47,00,326/- made by disallowing the expenses u/s 14A of the Income Tax Act.
3. That the appellant craves leave to add, amend, alter or forgo any ground/(s) of appeal raised above at the time of the hearing.
At the very outset the Counsel for the assessee drew our attention to the decision of this Tribunal in assessee’s own case for A.Y.2013-14 and A.Y.2005-06 to 2007-08. It is the say of the Counsel that as per section 5 (21) of the IBC the dues to the Central Government also fall within the definition of operational debts and in terms of resolution plan as approved by the NCLT of the claims or demands or liabilities or obligations owned or payable to or assessed or assessable by the Central Government/ State Government in relation to any period or prior to the acquisition will be written off in full and will be deemed to be permanently extinguished. The counsel stated that pursuant to the order of the NCLT this Tribunal in earlier assessment years have dismissed the appeal of the revenue.
Observation by the Court
The court carefully considered the orders of the authorities below and have also considered the decision of this Tribunal. The court have gone through in the light of submission made on either side. Dues to the Income-tax Department are reflected In list — B appended to the order passed by the NCLT. By such order, NCLT observed that there is a huge difference in the total amount of admitted secured financial creditors which is to the tune of Rs.1,14,72,05,50,325/- and the liquidatioa va!ue of the company to the tune of Rs.23,56,35,25,186/- and therefore, by application of the waterfall tnechanism mentioned In section 53 of the Code, the liquidation value due to unsecured financial creditors, operational creditors and other creditors of the assessee becomes nil. It is clear that In terms of the resolution plan as approved by the NCLT, all claims or demands or liabilities or obligations owed or payable to or assessed by or assessable by the Central Government/State Government. in relation to any period prior to the acquisition, will be written off in full and will be deemed to be permanently extinquished,,This position of law as dear in view of the decision of honourable supreme court .
In these circumstances, the court are of the considered opinion that the dues to the Income-tax Department for the assessment year 2013-14, which are reflected in the list-B appended to NCLT order stood fully extinguished and no useful purpose would be served by adjudicating this matter .
Conclusion
The appeal of the revenue is dismissed by the court.
ACIT-Vs-Monnet-Ispat-Energy-Ltd-ITAT-Delhi-1-1
