• Notification Date: 21-01-2022
• Notification No: N/A

Resolution Plans approved under IBC cannot be claimed by Income Tax

The Bombay High Court has given the verdict that the Income Tax Department cannot raise any further claims to the companies under the Insolvency and Bankruptcy Code (IBC) after a resolution plan gets approved.

The income tax department issued notices to the corporate debtor regarding this matter. There is no clear answer about the pending tax demand for the companies under IBC. The industry trackers are confused about the consequences of the refund that the companies might receive from the tax department after new buys take over the ownership.

Yashesh Ashar, a partner at a tax advisory firm, called Bhuta Shah & Co. has commented that the new ruling may create an issue when the corporate debtor starts getting these favors of assessments. The situation will be problematic if there is a claim of refund or loss carried forward.  

The Nagpur Bench of the Bombay High Court has rejected a notice that was issued to the Murli Industries for the reassessment of tax dues while declaring the ruling in the case. The Court ruled that the resolution professional of the IBC has made a public announcement to raise the claim by calling upon the statutory bodies and other concerns.   

Judging the situation, Mr. Ashar has said that the rights of the corporate debtor to raise the claim should be covered under the resolution plan that has been approved by the NCLT.