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.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal in ITA No.5281/Del/2024 for AY 2011-12, arises out of the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT(A)’, in short] dated 23.09.2024 against the order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 29.03.2014 by the Assessing Officer, ACIT, Circle-25(1), New Delhi (hereinafter referred to as ‘ld. AO’).
2. The revenue has raised the following grounds of appeal before us:-
“1. Whether, on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 9,33,75,712/ on account of disallowance u/s 801B of the IT Act.
2. Whether, on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 6,86,293/ on account of disallowance of welfare and training expenses.
3. Whether, on the facts and circumstances of the case and in law the Ld. CIT(A) has erred in deleting the addition of Rs. 2,94,371/- on account of disallowance of business development expenses.
4. The appellant craves leave to add, alter, amend, append or delete any of the above grounds of appeal.”
3. We have heard the rival submissions and perused the materials available on record. At the outset, the assessee raised a preliminary objection regarding the maintainability of the appeal of the revenue at this stage by stating that the assessee has been admitted into Corporate Insolvency Resolution Process (CIRP) by order of the Hon’ble National Company Law Tribunal (NCLT) dated 25-3-2022 and consequently a statutory moratorium under section 14 of the Insolvency and Bankruptcy Code 2016 (IBC) is in force as on date. The Learned AR placed the copy of order passed by NCLT dated 25-3-2022 on record. In terms of section 14 read with section 238 of the IBC, the institution or continuation of any proceedings against the Corporate Debtor (i.e. the assessee herein) is expressly barred during the subsistence of the moratorium in view of the overriding effect of the IBC over all other enactments including the Income Tax Act. The Hon’ble Supreme Court in the case of PCIT vs Monnet Ispat & Energy Limited had also categorically held that once Insolvency Proceedings are initiated, all proceedings under the Income Tax Act against the Corporate Debtor stand stayed in view of the moratorium provisions of the Insolvency and Bankruptcy Code. Accordingly, we hold that the appeal preferred by the revenue is not maintainable during the continuance of the moratorium and hence cannot be proceeded at this stage.
4. In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on 08/07/2026.
