Case Law Details
UM Green Lighting P. Ltd Vs DCIT (ITAT Delhi)
Introduction: The ITAT Delhi ruling in UM Green Lighting P. Ltd vs DCIT is a significant juncture in the intersection of insolvency and income tax laws. The case showcases how a moratorium declared by the NCLT under the Insolvency and Bankruptcy Code (IBC) can override the proceedings in the tribunal. This landmark verdict reshapes our understanding of the enforcement of prohibitions during moratorium periods.
Analysis: In the said case, the Resolution Professional (RP) highlighted that the company was under proceedings as per the IBC. Consequently, a moratorium was declared on all pending lawsuits or proceedings against the company, including any judgement execution. The Revenue could not continue its case against the assessee during this period due to NCLT’s overriding effect.
This ruling is in line with the decision of the Supreme Court in CIT Vs. Monnet Ispat and Energy Limited, where the overriding nature of the IBC was recognised. The assessee cannot pursue the appeal due to the IBC’s statutory provision. Therefore, all proceedings in any court of law, tribunal, etc., must cease, and this appeal had to be dismissed.
Conclusion: The case of UM Green Lighting P. Ltd vs DCIT manifests the overriding power of NCLT’s moratorium during insolvency proceedings as per the IBC. While this judgement reaffirms the principle of suspending all other proceedings during the moratorium period, it also allows the Revenue to seek remedial measures when the moratorium is over, if the company revives, or if the NCLT order changes. The judgement fortifies the function of a moratorium in insolvency proceedings and underscores the primacy of the IBC.
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