Case Law Details
Future Enterprises Limited Vs Circle 9(3)(2) (ITAT Mumbai)
Introduction: In a critical decision, the Income Tax Appellate Tribunal (ITAT) in Mumbai dismissed an appeal by Future Enterprises Limited due to the ongoing Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code (IBC) 2016. The Tribunal emphasized that no suit or proceeding can continue against the corporate debtor until the conclusion of the proceedings under the IBC.
Analysis: The appeal was dismissed following the order by the National Company Law Tribunal (NCLT) declaring a moratorium period under Section 14 of the IBC 2016. The Tribunal held that no court of law, arbitration panel, or authority can initiate or continue any suits or issue any judgment, decree, or order against the corporate debtor during this period. The ITAT Mumbai’s decision relied on a precedent set in the case of ACIT, CC-2(4) Vs. M/s Wizcraft International Entertainment Pvt. Ltd., which also involved a similar issue.
The ITAT Mumbai’s decision underlines the overriding effect of IBC 2016 during the insolvency resolution process. The Tribunal’s ruling reinforces the moratorium provision of the IBC, which is meant to provide an embattled corporate debtor a breathing space from litigation during the resolution process. It also clarifies that once the moratorium period is over, the debtor can prefer the appeal afresh or recall the present appeal.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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