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
This appeal is filed by the assesse against the order passed by the NFAC, Delhi, dated 23.12.2022 for A.Y. 2013-14.
2. At the time of hearing the ld. Representatives has brought to the knowledge of the bench that case of the assessee has been referred to the Corporate Insolvency Resolution Process under IBC-2016 and also furnished the copy of order of the NCLT dated 27.02.2023. It is noticed that in the case of the assessee the matter is pending before the Insolvency Professional in terms of Insolvency and Bankruptcy Code 2016 (the ‘Code’) and moratorium period has been declared as per Sec. 14 of the Code.
3. The National Company Law Tribunal has passed order u/s 14 of Insolvency and Bankruptcy Code 2016 as referred supra declaring moratorium period, which prohibit institution of suits or any continuation of pending suits or any judgment, decree, order in any court of law, Tribunal, arbitration panel or other authority against the corporate debtor. Therefore, we find that as per the provision of Sec. 14 of IBC-20 16 till the conclusion of proceedings under IBC 2016 no suit or proceedings can be continued against the corporate debtor.
4. After taking into consideration the decision of coordinate bench on the similar issue and identical facts in the case of ACIT, CC-2(4) Vs. M/s Wizcraft International Entertainment Pvt. Ltd. vide ITA No. 1356/Mum/2021 dated 06.06.2022 we dismiss the present appeal filed by the assessee in terms of the provisions of Sec. 14 of the code with liberty to the assessee that as soon as the moratorium period is over the assesse may prefer the appeal afresh or recall the present appeal.
3. In the result, the appeal of the assesse is dismissed.
Order pronounced in the open court on 24.05.2023
