FRUGAL DEVELOPERS P.LTD,NOIDA V. ACIT, CENTRAL CIRCLE-27, NEW DELHI

ITA 5757/DEL/2017

AI Insights

The case involves appeals by M/s Frugal Developers P Ltd. against orders related to quantum and penalty for the assessment year 2011-12. The company was undergoing insolvency resolution under the IBC, and a resolution plan was approved by the Committee of Creditors and sanctioned by the NCLT. The core issue was whether the tax demands raised by the revenue, which predated the approval of the resolution plan, could be enforced. The Supreme Court's decision in Ghanashaym Mishra & Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited, which held that all claims predating the resolution plan's approval are extinguished, was pivotal in the tribunal's decision to dismiss the appeals as infructuous.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314458 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Other Referred Cases: Ghanashaym Mishra & Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited (2021) 9 SCC 657
• Laws Referred To: Insolvency and Bankruptcy Code, 2016, Section 31(1) of the IBC
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: SOMIL AGARWAL

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No. 640/DEL/2016 (AY 2011-12) AND ITA No. 5757/Del/2017 (AY 2011-12) M/s Frugal Developers P Ltd., C/o RRA Taxindia, D-28, South Extension, Part-I, New Delhi – 49 Vs. DCIT, CC-18, NEW DELHI ̾थायी लेखा सं./जीआइआर सं./PAN/GIR No.: AABCF5805E Appellant .. Respondent Appellant by : Sh. Somil Agarwal, Adv. & Ms. Shilpa Gupta, CA Respondent by : Sh. Rajesh Kumar Dhanesta, Sr. DR. Date of Hearing 08.05.2025 Date of Pronouncement 08.05.2025 ORDER PER SHAMIM YAHYA, AM : These appeals filed by the assessee are directed against the respective orders dated 31.12.2015 & 21.08.2017 relating to quantum as well as penalty appeals for the assessment year 2011-12. 2 2. The assessee before us is subjected to insolvency resolution proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC), a resolution plan whereof was approved by the Committee of Creditors (COC) which was subsequently sanctioned by the Hon’ble National Company Law Tribunal (NCLT), conclusively concluding the insolvency proceedings under Section 31(1) of the IBC by and under its order dated 12.08.2024. 3. The case of the assessee is this that the demand now sought to be enforced by the revenue relate to the period prior to the resolution plan’s approval is, therefore, extinguished by the operation of law as already decided by the Hon’ble Apex Court in the case of Ghanashaym Mishra & Sons Private Limited Vs. Edelweiss Asset Reconstruction Company Limited, reported in (2021) 9 SCC 657 wherein it has been held that all claims, including statutory dues, predating the resolution plan’s approval, stand extinguished. Thus, taking into consideration this particular aspect of the matter, the statutory dues, including tax liabilities, pertaining to the period before resolution plan approved cannot survive. 4. It is contended by the Ld. Counsel appearing for the assessee that having regard to this particular aspect of the matter that the demand raised prior to the approval of the resolution plan are extinguished in terms of Section 31(1) of IBC the appeal becomes infructuous. Such submissions made by the ld. AR has not been controverted by the Ld. DR. 5. Having regard to the facts and circumstances of the matter and particularly the judgment passed by the Hon’ble Supreme Court in the case of Ghanashaym Mishra & Sons Private Limited Vs. Edelweiss Asset 3 Reconstruction Company Limited (supra) we find that the demand raised in the instant appeals pertain to the prior period to the approval of the resolution plan i.e. for Assessment Year 2011-12 is extinguished under Section 31(1) of IBC. Thus, both the appeals have becomes infructous and the same are dismissed as such. 6. In the result, both the appeals of the assessee are dismissed as infructuous. Order pronounced in the open court on 08.05.2025 Sd/- (SUDHIR PAREEK) Sd/- (SHAMIM YAHYA) JUDICIAL MEMBER ACCOUNTANT MEMBER SRBHATNAGAR Copy forwarded to:- 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT Assistant Registrar "