For the period covered by the Resolution Plan, Income Tax Department cannot carry out any scrutiny or assessment in respect of the Corporate Debtor regarding carry forward of losses and set off against future profits under Income Tax Act, 1961 – The Sirpur Paper Mills Ltd. & Another Vs. Union of India & Two Others – Telangana High Court
Hon’ble High Court holds that insofar carry forward of losses and adjustments against future profits are concerned, the same is provided by Clause 17.7(c) of the resolution plan. However, as and when such carry forward and set off is claimed by the petitioner in future, i.e. beyond the period covered by the resolution plan, the Income Tax Department would be entitled to verify such claim and pass appropriate order. But for the period covered by the resolution plan, it cannot carry out any scrutiny or carry out assessment in respect of the corporate debtor. To that extent, the impugned notices cannot be justified.
