Revenue Appeal Not Maintainable During IBC Moratorium: Delhi ITAT

ACIT Vs Vayam Technologies Ltd (ITAT Delhi)

The Delhi ITAT considered the Revenue’s appeal against the order of the National Faceless Appeal Centre for AY 2011-12, arising from an assessment made under Section 143(3) of the Income-tax Act, 1961. The Revenue challenged the deletion of additions relating to disallowance under Section 80IB, welfare and training expenses, and business development expenses.

At the outset, the assessee raised a preliminary objection to the maintainability of the appeal, stating that it had been admitted into the Corporate Insolvency Resolution Process (CIRP) by the National Company Law Tribunal’s order dated 25.03.2022 and that a statutory moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 was in force. The assessee relied on the NCLT order and submitted that, by virtue of Sections 14 and 238 of the IBC, institution or continuation of proceedings against the corporate debtor was barred during the moratorium.

The Tribunal observed that the Supreme Court in PCIT vs Monnet Ispat & Energy Limited had held that once insolvency proceedings are initiated, proceedings under the Income-tax Act against the corporate debtor stand stayed in view of the IBC moratorium. Holding that the Revenue’s appeal was not maintainable during the subsistence of the moratorium, the ITAT dismissed the appeal.