10/05/2022

Whether proceedings under Income Tax Act, 1961 have to be kept in abeyance by the assessing officer in the light of the insolvency proceedings under IBC – SREI Equipment Finance Ltd. Vs. Additional/Joint/Deputy/Assistant Commissioner of Income Tax and Others – Calcutta High Court

Hon’ble High Court held that the assessing officer committed grave error in proceeding to complete the assessment and pass the order and refused to stay the proceedings till the completion of the Insolvency Resolution Process. At this juncture, it would be important to note the decision the Hon’ble Supreme Court in the case of Alchemist Asset Reconstrution Company Ltd. Vs. M/S. Hotel Gaudavan Pvt. Ltd. & Ors. [2017] ibclaw.in 09 SC, wherein the Hon’ble Supreme Court had pointed out that the mandate of the new insolvency Code is that the moment an insolvency petition is admitted, the moratorium that comes into effect under Section 14(1)(a) expressly interdicts institution or continuation of pending suits or proceedings against corporate debtors. This legal principle should have been borne in mind by the assessing officer before he proceeded to pass the assessment order.

Whether proceedings under Income Tax Act, 1961 have to be kept in abeyance by the assessing officer in the light of the insolvency proceedings under IBC – SREI Equipment Finance Ltd. Vs. Additional/Joint/Deputy/Assistant Commissioner of Income Tax and Others – Calcutta High Court Read Post »

CIRP cannot be initiated for LTC and Leave Encashment dues which fall within the ambit of service benefits/welfare benefits – Kishore K. Lonkar Vs. Hindustan Antibiotics Ltd. – NCLAT New Delhi

The Adjudicating Authority dismissed an application u/s 9 of IBC holding that it is the very case of the petitioner that the amount is due towards “gratuity”, “leave encashment”, and “LTC”, on account of superannuation that amounts to “service benefits” and not services and will not qualify under the definition “Operational Debt”. NCLAT upheld the decision of the AA holding that the Section 5(21) of IBC includes any ‘Claim’ in respect of the provision of Goods and Services including ‘employment’. It is not the case of the Appellant that the amounts claimed are due towards any emoluments/salary for the services rendered by him to the ‘Corporate Debtor’, while he was in service. Though ‘service benefits’ like ‘LTC’ accrue, on account of the service rendered during the period of employment, the scope and objective of the Code is simply not just for recovery of ‘dues’ but Resolution of the Companies meant for ‘maximisation of the value of assets’, to promote entrepreneurship, availability of credit and balance all interest of the stakeholders. Employees and workmen do constitute a major part of the stakeholders.

CIRP cannot be initiated for LTC and Leave Encashment dues which fall within the ambit of service benefits/welfare benefits – Kishore K. Lonkar Vs. Hindustan Antibiotics Ltd. – NCLAT New Delhi Read Post »

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