Allowed

In the matter of Nav Jyoti Agro Foods Pvt. Ltd. Ia No. 307-2021 in Cp (Ib) No. 337-Chd-Hry-2018

NCLT15 Dec 2022

Case brief

AI extract

What is this about?

The tribunal held that income tax recovery made by the department during the moratorium period under the Insolvency and Bankruptcy Code was a violation of law, as the Code overrides the Income Tax Act. The application was allowed.

What did the court decide?

The respondent Income Tax Department was directed to refund the recovered amount of Rs. 85,04,845/- made during the moratorium period.

In the matter of Nav Jyoti Agro Foods Pvt. Ltd. Ia No… — Insolvency and Bankruptcy | NCLT (2022)

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fact it is submitted that the refund of Rs. 85,04,845/- for the A.Y. 2018-19 was duly adjusted against the said demand by the systems in view of the provisions of a set-off provided under Section 245 of the Income Tax Act. Further, the applicant has not made any application to the concerned Assessing Officer for a refund of any amount of the tax paid in excess. Secondly, in view of the provisions of Section 245 of the Act, unless the entire demand is satisfied by the assessee, the assessee cannot be treated as entitled to any refund. The assessee can only claim a right over the refund only and only after there is no amount outstanding against the assessee.

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We have heard the learned counsels for the applicant-Resolution Professional and the respondent. After careful perusal of the records available, it may be noted that the Hon’ble Supreme Court in Pr. Commissioner of Income Tax Vs. Monnet Ispat And Energy Ltd. MANU/SCOR/25330/2018, held that;

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“Given Section 238 of the Insolvency and Bankruptcy Code, 2016,it is obvious that the Code will override anything inconsistent contained in any other enactment, including the Income-Tax Act.”

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Keeping in view of the above decision, in the instant matter, moratorium under section 14 of the Code was declared on 12.02.2019 whereas the Income Tax Department on 16.06.2020 has, on the suo-moto basis, recovered Rs. 85,04,845/- by way of appropriation of advance tax/TDS. It is noted that in the case of Alchemist Asset Reconstruction

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IA No. 307/2021

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CP (IB) No. 337/Chd/Hry/2018 (Admitted)

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Company Ltd. Vs. M/S. Hotel Gaudavan Pvt. Ltd. & Ors. [2017] ibclaw.in

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09 SC , the Hon’ble Supreme Court observed 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. The above-said recovery was made during the period of moratorium, which is in clear violation of the law. Therefore in terms of the above decisions, we direct the respondent Income Tax Department to refund the recovery made on 16.06.2020 amounting to Rs. 85,04,845/- during the moratorium period.

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