Insolvency and bankruptcy code - NADT.pptx

Bankruptcy law and insolvency law

1. Insolvency and Bankruptcy Code 2016 Implication on the Income Tax Department R.MUKUNDAN, ADDL CIT, NADT RC Chennai

2. Project analysis slide 2 IBC 2016 Content 5 . Role and Duties of Resolution Professional 6 . Liquidation Process 7 . Implication under the Income Tax Act 1 . Need for IBC, 2016 2 . Salient Features of IBC 2016 3 . Regulatory Mechanism R.MUKUNDAN, Addl.CIT 4 . Corporate Insolvency Resolution Process(CIRP)

3. R.MUKUNDAN, Addl.CIT Need for IBC 2016 Cumbersome Resolution Process Time Consuming Multiplicity Of Laws And Litigation No Power To Creditors. Control Was Still With Promoters Even After Default Low Recovery Rate

4. R.MUKUNDAN, Addl.CIT Salient Features Comprehensive code Removes multiplicity of laws Time-bound resolution Single Window clearance Independent Regulatory authority Creditors in control Govt dues no longer the highest priority

5. Project analysis slide 3 Regulatory Mechanism Information Utilities (IU) R.MUKUNDAN, Addl.CIT Insolvency and Bankruptcy Board of India (IBBI) Insolvency Professionals (IP) Insolvency Professional Agencies (IPAs) Adjudicating Authority (AA)

6. Project analysis slide 3 Corporate Insolvency Resolution Process CIRP R.MUKUNDAN, Addl.CIT Who can initiate the CIRP a. Financial Creditor b. Operational Creditor c. Corporate Debtor itself OPERATIONAL CREDITOR Defined in Section 5(20) of the Code means a person to whom an operational debt is owed and includes any person to whom such debt has been legally assigned or transferred . The Operation Debt is defined in Section 5(21) of the Code and as per sub clause (c) of this section it means “a debt in respect of the payment of dues arising under any law for the time being in force and payable to Central Government, any State Government or any Local Authority”..

7. Project analysis slide 2 Department as “Operational Creditor” R.MUKUNDAN, Addl.CIT Pr. Director General of Income Tax v. Synergies Dooray Automotive Limited & Ors , the Hon’ble NCLAT , held that ‘Income Tax Department of the Central Government’ and the ‘Sales Tax Department(s) of the State Government’ and ‘local authority’, who are entitled for dues arising out of the existing law are ‘Operational Creditor’ within the meaning of Section 5(20) of the ‘I&B Code

8. Project analysis slide 3 Corporate Insolvency Resolution Process CIRP R.MUKUNDAN, Addl.CIT Application to be filed before AA Accepted / Rejected with in 14 days Process commences from date of admission

9. Project analysis slide 3 Corporate Insolvency Resolution Process CIRP R.MUKUNDAN, Addl.CIT If the application is considered fit for admission, the AA in its order would a. declare a moratorium u/s 14 on all suits and legal proceedings b. cause a public announcement to be made to call for submission of claims u/s 15 c. appoint an Insolvency Professional as IRP i.e. Interim Resolution Professional u/s 16

10. Project analysis slide 4 Role and Duties of IRP / RP Issuance of Public Notice of CIRP Collation of claims received from the creditors Constitution of Committee of Creditors (COC) Conduct of the meeting of COC Obtaining Valuation of Entity Running the business of the Corporate Debtor Examine each Resolution Plan R.MUKUNDAN, Addl.CIT Follow all rules and regulations Reporting to IBBI and AA Getting the consent of COC

11. Project analysis slide 6 Liquidation The AA can order for liquidation, If no Resolution plan is received by specified time . the COC comes to a decision that Corporate Debtor has to be liquidated R.MUKUNDAN, Addl.CIT the Resolution Plan is in contravention with the interest of any person and who makes an application to AA for liquidation

12. Project analysis slide 6 Order of Liquidation R.MUKUNDAN, Addl.CIT Order requiring the corporate debtor to be liquidated in the manner as laid down in Chapter III, Part II of the Code Order for issuing a Public Announcement stating that the Corporate Debtor is in liquidation Such order to be sent to the authority with which the Corporate Debtor is registered

13. Insolvency and Bankruptcy Code 2016 Implication on the Income Tax Department

14. Project analysis slide 4 Issues Involved R.MUKUNDAN, Addl.CIT 1. The Role and Responsibility of Liquidator 4. Book Profit u/s 115JB – applicable ? 5. Carry forward and Set off of Losses u/s 79 6. Applicability of Section 50CA 7. Applicability of Section 56(2)(x) 2. Moratorium Period – Does it affect our proceedings? 8. Principal component of Loan and Interest waiver under IBC - Taxability 3. Government Dues – Order of Priority

15. Project analysis slide 4 Issues Involved 9. Section 281 applicability 10. Capital Gains Tax on Sale of Assets 11. Whether TDS by Payee on sale of assets refundable 12. Proceedings post liquidation- valid? 13. Company under IBC, what about Directors Liability 15. Who can represent before IT Authorities – Section 288 R.MUKUNDAN, Addl.CIT 14. Return to be verified by whom

16. Project analysis slide 4 Issues Involved 16 Section 32 A of IBC – Attachment of assets, prosecution after CIRP 17 Section 156A – Finance Act 2022 19 Section 170A – Finance Act 2022 R.MUKUNDAN, Addl.CIT 18 Section 170 – Finance Act 2022

17. Project analysis slide 2 1.Role & Responsibility of Liquidator U/s.178 Company in Liquidation U/s.178 (1) The Liquidator has to intimate the AO within 30 days of appointment (2) The AO to intimate the Liquidator within 3 months, the taxes due or likely to be due (3) Liquidator cannot dispose of any assets without the approval of CCIT/CIT until he has been notified by AO, on being notified should also set aside an amount and then only he can part with assets (with some exceptions) R.MUKUNDAN, Addl.CIT (4) In case of failure u/s 178(1) or 178(3) he is personally liable for the dues ( 276A – Prosecution for contravention of 178(1),(3) )

18. Project analysis slide 2 Role & Responsibility of Liquidator U/s.178 Company in Liquidation U/s.178 (6) The provisions of this section shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force R.MUKUNDAN, Addl.CIT Clause (6) Amended to include the following words “except the provisions of the Insolvency and Bankruptcy Code, 2016.” (w.e.f. 01-11-2016)

19. Project analysis slide 2 Relevant Provisions of IBC 2016 R.MUKUNDAN, Addl.CIT There will be a public announcement by the IRP specifying the timeline for submission of claims The department has to submit its claim in Form B of Schedule Under Regulation 7 of CIRP Regulations CBDT communication Dt. 28/09/2017 Dt. 22/02/2018 The Department is considered as “Operational Creditor”

20. Project analysis slide 3 2. Moratorium Period U/s.14 of IBC R.MUKUNDAN, Addl.CIT How does it Impact IT Proceedings During Moratorium period stay on judicial proceedings for recovery, sale or transfer of assets, against the debtor i.e. the Assessee Does Moratorium Period extend to all the Income tax proceedings or only to recovery proceedings?. Hon. Supreme Court held in the case of PCIT vs Monnet Ispat and Energy Ltd., dt.10/08/2018, upholding the Delhi High Court decision, that the Moratorium period u/s 14 of the IBC , 2016 will also apply to Income Tax Department Appeals against Tribunal orders in respect of tax liability of a debtor. The Delhi High Court held that the Moratorium continues till the completion of CIRP or until NCLT approves the resolution plan or passes an order for liquidation of the debtor, whichever is earlier. CBDT communication dt. November 2021

21. Project analysis slide 3 2. Moratorium Period U/s.14 of IBC ( contd ) R.MUKUNDAN, Addl.CIT Recent decisions: 1. Associated Décor Ltd v Deputy Commissioner of Commercial Taxes – Karnataka HC – 16/12/2021 All proceedings pursuant to the impugned notices, intimations, orders, etc. issued/passed by the respondent against the petitioner are stayed/suspended/ kept in abeyance till disposal of the proceedings before the NCLT, Bengaluru and also further appeal(s), if any, that may be filed by any of the parties and lifting of the moratorium and completion of the corporate insolvency resolution process insofar as the petitioner is concerned 2. Sirpur Paper Mills – Telengana High Court – 18/01/2022 All assessments / appellate or other proceedings pending in case of the Corporate Debtor, on the date of the order of NCLT relating to the period prior to that date, shall stand terminated and all consequential liabilities, if any, stand abated and should be considered to be not payable by the Corporate Debtor in relation to the period prior to the date of NCLT order all notices proposing to initiate any proceeding against the corporate debtor in relation to the period prior to the date of the Tribunal's order and pending on that date shall stand abated and should not be proceeded against. Post the order of the Tribunal, no re- assessment or revision or any other proceeding under the Act shall be initiated on the corporate debtor 3. Dishnet Wireless – Madras High Court – 17/06/2022 - (In Revenue favour ) Corporate Insolvency Resolution Plan sanctioned and approved cannot impinge on the rights of the department to pass any fresh assessment order u/s 148 r.w.s.143(3 ) -

22. Project analysis slide 3 2. Moratorium Period U/s.14 of IBC ( contd ) R.MUKUNDAN, Addl.CIT Recent decisions (contd.) 4. Hyderabad ITAT decision – ITA No.1997 & 1998/ Hyd – Gayathri Projects Limited - dt.22-07-2022 - Appeal proceedings cannot be continued during CIRP under IBC. Appeals dismissed now. Can be restored later depending upon the Resolution Plan -

23. Project analysis slide 3 3. Government Dues – Order of Priority No provision in IBC that gives a right to the department to claim preferential treatment Income tax department is not treated as a secured financial creditor under IBC Section 178 (3) which mandates setting apart assets for dept dues is no longer applicable for a company under IBC, in view of amendment to Section 178(6) Sec 53 of IBC provides order of priority for distribution of assets and as per that dues to Central or State Govt comes only fifth in the order of priority. R.MUKUNDAN, Addl.CIT Right Of Income Tax Department To Claim Preferential Treatment In The Event Of Liquidation

24. ORDER OF PRIORITY UNDER I B C

25. Project analysis slide 2 R.MUKUNDAN, Addl.CIT Whether the department can be a Secured Creditor? LANDMARK DECISION OF HON’BLE SUPREME COURT DT. 06-09-2022 In the case of Rainbow Papers Ltd v State Tax Officer (Gujrat Value Added Tax) COC cannot secure their own dues at the cost of Statutory dues. The definition of Secured Creditor in the IBC does not exclude any Government or Government Authority Delay in filing a claim cannot be the sole ground for rejecting the claim

26. LATEST REVENUE FAVOURABLE DECISION OF NCLT CHANDIGARH DT.02/05/2023 In the case of Tarachand Rice Mills P Ltd Company under liquidation Incometax department filed its claim after a delay of 1023 days. Department claim rejected as belated by Liquidator Proceeds out of liquidation of assets already distributed to others not considering department claim HOWEVER Following the decision of Hon’ble SC in the case of Rainbow papers Ltd dt. 06/09/2022 which was relied on by NCLAT Delhi in the case of PCIT v Assam company India Ltd vide order dt. 07/02/2023, it was held that department is a secured creditor and delay of 1023 days condoned and liquidator was directed to recover the proceeds wrongly distributed to others and to redistribute the proceeds in terms of Section 53 treating the department as a Secured Creditor.

27. To keep in mind this High Court decision also (AP & Telengana ) Leo Edibles & Fats Ltd. Vs. The Tax Recovery Officer (Central) Income Tax Department, Hyderabad and others [WP No. 8560 of 2018] – order dt. 26/07/2018 Property of company in liquidation under IBC , already under attachment by TRO As per Liquidation Order of NCLT property sold to a third party Department objected to the release of property Held by Hon’ble High Court In case of liquidation of a company under the Code, section 178 of the Income-tax Act, 1961 stands excluded by virtue of the amendment of section 178 (6) with effect from 01.11.2016, in accordance with section 247 read with the Third Schedule to the Code. Therefore, in the event an assessee company is in liquidation under the Code, the Incometax Department can no longer claim a priority in respect of clearance of tax dues of the said company. It has to come under waterfall mechanism

28. Project analysis slide 2 4. Applicability of Sec115JB For Companies Under CIRP R.MUKUNDAN, Addl.CIT Yes. It is applicable But with some significant changes Provision before Amendment : On few items that have to be reduced while computing Book Profit: (iii) The amount of loss brought forward OR unabsorbed depreciation WHICHEVER IS LESS The Loss shall not include depreciation This clause will not apply if loss brought forward or unabsorbed depreciation is Nil. (vii) The amount of profit of a sick industrial company - for some specific assessment years

29. Project analysis slide 2 Amendment to Sec 115JB w.e.f 01.04.2018 R.MUKUNDAN, Addl.CIT After clause ( iig ), the following clause shall be inserted, namely:–– ( iih ) the aggregate amount of unabsorbed depreciation AND loss brought forward in case of a company against whom an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under section 7 or section 9 or section 10 of the Insolvency and Bankruptcy Code, 2016. Explanation .—For the purposes of this clause, the expression “Adjudicating Authority” shall have the meaning assigned to it in clause (1) of section 5 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) and the loss shall not include depreciation

30. Project analysis slide 2 Amendment to Sec 115JB w.e.f 01.04.2018 R.MUKUNDAN, Addl.CIT (iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account in case of a company other than the company referred to in clause ( iih ).

31. Project analysis slide 2 Amendment to Sec 115JB w.e.f 01.04.2020 R.MUKUNDAN, Addl.CIT Aggregate amount of unabsorbed depreciation and loss (excluding depreciation) brought forward shall also be allowed to be reduced from the book profit in case of a company, and its subsidiary and the subsidiary of such subsidiary , where the NCLT, on an application moved by the Central Government under section 241 of the Companies Act, 2013 has suspended the Board of Directors of such company and has appointed new directors who are nominated by the Central Government, under section 242 of the said Act. A company shall be a subsidiary of another company, if such other company holds more than half in nominal value of the equity share capital of the company.

32. Project analysis slide 3 5. Carry Forward & Setting off Of Losses In The Case of Certain Companies Sec. 79 R.MUKUNDAN, Addl.CIT Provision Before Amendment carry forward and set off of losses in a closely held company shall be allowed only if there is a continuity in the beneficial owner of the shares carrying not less than 51 percent. of the voting power, on the last day of the year or years in which the loss was incurred. Amendment w.e.f. 01.04.2018 “Provided also that nothing contained in this section shall apply to a company where a change in the shareholding takes place in a previous year pursuant to a resolution plan approved under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), after affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or Commissioner.”

33. Project analysis slide 3 Amendment w.e.f.01.04.2020 Sec. 79 R.MUKUNDAN, Addl.CIT ( i ) the National Company Law Tribunal (NCLT) on a petition moved by the Central Government under section 241 of the Companies Act, 2013 has suspended the Board of Directors of such company and has appointed new directors, who are nominated by the Central Government, under section 242 of the Companies Act, 2013: and (ii) a change in shareholding of such company, and its subsidiaries and the subsidiary of such subsidiary, has taken place in a previous year pursuant to a resolution plan approved by NCLT under section 242 of the Companies Act, 2013, after affording a reasonable opportunity of being heard to the jurisdictional Principal Commissioner or Commissioner Carry forward and set off of losses is allowed to its subsidiaries and the subsidiary of such subsidiary also. where

34. Project analysis slide 3 6. Section 50CA R.MUKUNDAN, Addl.CIT Provision Before Amendment provides for deeming of fair market value of unquoted shares for computing the capital gains from the transfer of such shares. The fair market value is determined based on the prescribed method (Rule 11UAA) Amendment w.e.f. 01-04-2020 Provided that the provisions of this section shall not apply to any consideration received or accruing as a result of transfer by such class of persons and subject to such conditions as may be prescribed (Notification dt. 30/06/2020 – Rule 11UAD - Will not apply to IBC cases)

35. Project analysis slide 3 7. Section 56(2)(x) R.MUKUNDAN, Addl.CIT Provision Before Amendment: chargeability of income in case of receipt of money or specified property for no or inadequate consideration. For determining the amount of income for receipt of certain shares, the fair market value of the shares is taken into account Amendment w.e.f. 01-04-2020 Provided that this clause shall not apply to any sum of money or any property received from such class of persons and subject to such conditions as may be prescribed (Notification dt. 29/06/2020 – Rule 11UAC - Will not apply to IBC cases)

36. Project analysis slide 3 8. Debt (Principal Portion & Interest) Waiver Implication R.MUKUNDAN, Addl.CIT Under the earlier Sick Industrial Companies Act Regime specific provisions provided exemption from tax liability and also MAT Liability However, under IBC there are no such specific exemptions Therefore, there are tax implications under normal as well as MAT provisions in respect of the Debt i.e. Principal Portion waiver and the Interest waiver .

37. Project analysis slide 3 Debt (Principal Portion & Interest) Waiver Implication However, the decision in the following cases have to be kept in mind The Hon. Supreme Court decision in the case of CIT v. Mahindra and Mahindra Limited (2018) 93 taxmann.com 32 (SC) Loan Waiver - Applicability of S. 28(iv) & 41(1): (a) S. 28(iv) does not apply if the receipts are in the nature of cash or money (b) S. 41(1) does not apply if the waiver of loan does not amount to cessation of trading liability i.e if the assessee has not claimed any deduction u/s 36 (1) (iii) of the IT Act qua the payment of interest in any previous year Madras HC decision in CIT v. Ramaniyam Homes (P) Ltd, (2016) 384 ITR 530   principal loan amount waived by the bank under the one time settlement scheme which the assessee received during the course of its business is exigible to tax waiver of principal amount would constitute income falling under Section 28(iv)of the Income Tax Act being the benefit arising for the business But an important decision in dept favour to be kept in mind wrt Section 41(1) is the SC decision in the case of T V Sundaram Iyengar & Sons Ltd (222 ITR 344) (1996) – Cessation of Trading Liability R.MUKUNDAN, Addl.CIT Cochin Co. Ltd. [1990] 81 CTR 115 (Ker HC) remission of amount by the supplier of machinery - could not be reduced from the cost of the machinery of the assessee for the purpose of income-tax

38. Project analysis slide 3 Debt (Principal Portion & Interest) Waiver Implication However, the decision in the following cases have to be kept in mind Recent NCLT Mumbai decision in the case of Subodh Kumar Agrawal (RP of Ushdev International Ltd) Dt. 14/10/2022 Amount due to creditors waived – written back in assessee’s books – incometax liability on the notional income.- waived. R.MUKUNDAN, Addl.CIT

39. Project analysis slide 3 9. Sec 281 Applicability As per Sec 281 during the pendency of any proceedings under the Act, any transfer of assets will be treated as void subject to the exception that NOC is obtained from the Income Tax Department Since the proceedings before IBC will involve disposal of assets whether the IP has to obtain NOC from the department before disposing off the property under IBC? We have to be aware of this implication and we have to be also clear under what circumstances NOC can be issued if IP applies for the same. R.MUKUNDAN, Addl.CIT

40. A FAVOURABLE DECISION (relevant for Section 281B) PCIT Central -2, Chennai Vs. C. Ramasubramaniam , Resolution Professional for Surana Corporation Ltd. [CA(AT)(Ins) No. 1290/2019] The Appellant submitted that in terms of the provisions of the Income-tax Act, 1961, it is a secured creditor and in terms of the Code, it is an Operational Creditor. The Form B in CIRP Regulations has no provision for OC to claim that CD has created security interest. The NCLAT allowed the appellant to make a claim before the liquidator as a secured creditor. Note: IBBI (Insolvency Resolution Process for Corporate Persons) (Third Amendment) Regulations, 2019 has amended Form B and inserted “a. any security held, the value of security and its date”.

41. Project analysis slide 3 Right of Govt. Department For a Hearing The Hon'ble Rajasthan High Court decision in the case of M/s Ultra Tech Nathdware Cements Limited [TS-244-HC-2020(RAJ)-NT] dt.07/04/2020 After following the due process of law, the Committee of Creditors agreed to the resolution plan proposed by Petitioner. Resolution plan, approved by the NCLAT. Department had dispute with reference to the tax dues of the assessee and wanted to enforce it fully The Petitioner relied on the amended provisions of Section 31(1) of the IBC Act and argued that the resolution plan was binding on all creditors including the Department and the Government could not make any further claim, other than what was stated in the resolution plan The Department mainly argued that they were never heard by the COC before the resolution plan was finalized and hence, the resolution plan was not binding on the Department. The Hon’ble High Court decided the matter in favour of the assessee and held that once the offer of the resolution applicant was accepted, the same is binding on all parties. The Hon’ble HC also clearly held that the IBC did not contemplate giving a right of audience(hearing) to Govt who are operational creditors under IBC R.MUKUNDAN, Addl.CIT

42. Project analysis slide 3 10. Capital Gain Tax on Sale of Asset Applicability Of Capital Gain Tax And Liability Of Payment Of Tax Thereupon On Sale Of Fixed Assets Of Corporate Debtor By Liquidator Appointed Under IBC No provision in IBC that gives a right to the department to claim preferential treatment Whether capital gains tax have to be recovered compulsorily from the assets disposed of during the IBC proceedings treating it as Insolvency Resolution Process Cost Secured creditors get precedence above operational creditors like Income tax. Therefore, only following the order of priority capital gains tax liability may be enforced and it cannot be straightaway deducted as cost It may not be possible as IRP cost as defined in regulation 31 of IBBI regulations 2016 does not include taxes payable on disposal of assets during the course of liquidation. R.MUKUNDAN, Addl.CIT The decision in the case of CIT v KTC Tyres (SC) followed in CIT Mumbai v LML Ltd under IBC

43. Project analysis slide 3 11. Refund of TDS Refund Of TDS Deducted By Payee Towards Capital Gains On Sale Of Assets During Liquidation Sec 238 (2) the liquidator has the right to apply for refunds under the Income Tax Act. R.MUKUNDAN, Addl.CIT

44. Project analysis slide 3 12. Proceedings Post Liquidation After the liquidation the Company legally ceases to exist that leads us to the following questions Refer CBDT communication dt.29/12/2017 dealing with Income Tax Proceedings against companies struck off by ROC. Probably similar steps have to be taken for companies getting liquidated under IBC Whether assessment proceedings can be initiated on a liquidated company If yes, a next question that would arise as to who would represent the company in the proceedings Can a Director or any other Principal Officer in charge of the company will be liable. R.MUKUNDAN, Addl.CIT

45. Project analysis slide 3 13. Liability of Directors R.MUKUNDAN, Addl.CIT The submissions made by the Insolvency professional under the IBC will be a good basis to fix up the responsibility on the specific Directors as the liability cannot be fixed summarily on all the Directors without bringing on record the role played by the concerned Directors for the default of the company In case of private companies under liquidation where tax dues cannot be recovered from the company, it can still be recovered from the Directors following few procedures subject to some exceptions. (Section 179)

46. Project analysis slide 3 14. Return by whom to be verified Sec. 140 R.MUKUNDAN, Addl.CIT Provision Before Amendment – By the MD or any other Director if the MD is not able to verify the return due to some unavoidable reason - in case of a company under liquidation, by the liquidator referred to in Section 178(1) Amendment w.e.f. 01.04.2018 Where in respect of a company, an application for corporate insolvency resolution process has been admitted by the Adjudicating Authority under section 7 or section 9 or section 10 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the return shall be verified by the insolvency professional appointed by such Adjudicating Authority . Amendment w.e.f. 01.04.2020 in clause (c), after the words “by any director thereof”, the words “or any other person, as may be prescribed for this purpose” shall be inserted;

47. Project analysis slide 3 15. Amendment to Sec 288(2) w.e.f 01/04/2020 Section 288 – Appearance by Authorised Representative In section 288 of the Income-tax Act, in sub-section (2), after clause (vii), the following clause shall be inserted, namely:–– “(viii) any other person as may be prescribed.” R.MUKUNDAN, Addl.CIT

48. Project analysis slide 3 16. SECTION 32A OF I B C Sub Section 1 – Immunity from Prosecution for past offences Sub Section 2 – No Action against assets of Corporate Debtor R.MUKUNDAN, Addl.CIT Can Prosecution be launched against the Directors when there cannot be any prosecution against the Corporate Debtor? Yes - Anil Hada vs Indian Acrylic Limited on 26 November, 1999 (SC) 2. PBPT Act – can property be attached if the benami transaction happened before the CIRP commenced? - Yes. Recent decision in the case of Enforcement Directorate under PMLA – Rajiv Chakroborthy RP v Directorate of Enforcement – Delhi High Court = dt. 11/11/2022 - moratorium would not prevent the authorities under the PMLA from exercising the powers conferred by Sections 5 and 8 notwithstanding the pendency of the CIRP.

49. Project analysis slide 3 17. Section 156A w.e.f 01/04/2022 R.MUKUNDAN, Addl.CIT ( 2) Any further modification by NCLAT or SC also to be given effect (1) Demand Notice issued u/s 156 to be modified in accordance with the order of AA under IBC and to be issued to assessee – Deemed to be a notice u/s 156

50. Project analysis slide 3 18. Section 170 – Succession in business otherwise than on death w.e.f 01/04/2022 R.MUKUNDAN, Addl.CIT ( 2A . Assessment made on the predecessor during the course of pendencey of proceedings – deemed to have been made on successor 3. Taxes can be recovered from Successor if it can’t be recovered from predecessor 1. Assessment on the predecessor upto the date of succession – Assessment of later period on the Successor 2. If Predecessor can’t be found assessment can be made on the successor even for the earlier period

51. Project analysis slide 3 19. Section 170A w.e.f 01/04/2022 R.MUKUNDAN, Addl.CIT ( Within a period of 6 months from the end of the month in which such order is passed, to file a modified return Return filed u/s 139 by the successor, before the order of HC/Tribunal/AA, as defined in IBC

52. Thank you