• Notification Date: 15-12-2023
• Notification No: N/A

NCLT Directs Income Tax Dept to Refund Rs 28 Lakhs TDS

The National Company Law Tribunal (NCLT) has directed the Income Tax department to refund Rs 28 lakh to a corporate debtor. This amount had been deposited by the debtor during the sale of its liquidated property. The NCLT bench ruled that the rules of the Insolvency and Bankruptcy Code (IBC) take precedence over the Income Tax Act, making the department responsible for reimbursing the Tax Deducted at Source (TDS) deducted from property buyers. 
 
The case in question involved Varia Engineering Works, a city-based company that gained attention when its CMD Himashu Varia attempted suicide in 2020 amid company’s Rs 500 crore debt crisis. Varia recently made headlines in the Iskcon Flyover accident case, where Tathya Patel was involved. It was reported that the Jaguar car driven by Tathya was allegedly owned by Varia. 
 
The NCLT bench, comprising Chitra Hankare (judicial member) and Dr VG Venkata Chalapathy, heard a petition filed by Sunil Agrawal through his advocates Nipun Singhvi and Vishal Dave. Agrawal, appointed as the liquidator after Bank of Baroda filed an IBC petition against Varia Engineering Works Private Limited, aimed to recover the company’s debt. 
 
During the liquidation process, properties were sold, and buyers deducted around Rs 28 lakh in accordance with the Income Tax Act. However, as per the liquidation waterfall, I-T authorities are subordinate, leading the liquidator to seek a refund based on previous NCLAT judgments. When the department failed to pay the amount, the liquidator approached the NCLT, which then directed the department to refund the tax.