Income Tax Dues Are Operational Debts Under IBC
M & A Critique|April 2019

The Center has set up National Company Law Tribunal (NCLT) on June 1, 2016 to look in to cases relating to insolvency and bankruptcy of companies, especially those that have a huge bank debt.

Pritam Sangwan
Income Tax Dues Are Operational Debts Under IBC

It works like the courts of law in the country and determines the facts of each case and decides in accordance with principles of natural justice.

There were multiple petitions filed with NCLT benches by Tax departments pertaining to treatment of their dues during the Corporate Insolvency Resolution Process (CRIP) under Insolvency and Bankruptcy Code (IBC), 2016.

Why taxman is running to NCLT for relief?

· Adjudicating Authority has granted huge Income Tax benefits in the resolution plan. Respondent- 'Synergies Castings Ltd.' without impleading the Appellant department as a Respondent to the said proceedings. (CA. No. 205 of 2017 - Synergies Dooray Automotive Ltd. & Ors.)

· The grievance of the tax department is that the Income Tax liability/ demand in respect of the 'Corporate Debtor' was settled for 1% of the 'crystallized demand' against the mandate of the Income Tax Act, 1961. (CA. No.671 of 2018-. Raj Oils Mills Ltd. & Ors)

· Resolution Professional had not intimated during the CIRP to attend the meeting of the 'Committee of Creditors' (CoC) and plan has been approved prejudicial to the rights of the Tax departments, Further, the 'Sales Tax' and 'Value Added Tax' (VAT) do not come within the meaning of 'Operational Debt' and thereby, 'Sales Tax Department, State of Maharashtra' cannot be treated to be an 'Operational Creditor'.(CA. No. 309 of 2018- Sales Tax Department Vs M/s. Raj Oil Mills Limited & Vs Parte Casters Pvt. Ltd. & Ors )

· Reduction of VAT to 1% is against the existing VAT law which say's 'liability under the Act to be the first charge' (559 of 2018- Sales Tax Department, State of Maharashtra vs Phoenix Erectors Pvt. Ltd. & Ors)

This story is from the April 2019 edition of M & A Critique.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the April 2019 edition of M & A Critique.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM M & A CRITIQUEView All
STRATEGIC MERGER SHALL CATAPAULT ASTER DM AS THE 3rd LARGEST HOSPITAL CHAIN IN INDIA
M & A Critique

STRATEGIC MERGER SHALL CATAPAULT ASTER DM AS THE 3rd LARGEST HOSPITAL CHAIN IN INDIA

\"The resulting merged listed entity will be called Aster DM Quality Care Limited\"

time-read
3 mins  |
December 2024
STAMP DUTY EXEMPTION ON TRANSFER OF SHARES AS PART OF MERGER OF SUBSIDIARIES
M & A Critique

STAMP DUTY EXEMPTION ON TRANSFER OF SHARES AS PART OF MERGER OF SUBSIDIARIES

A Writ Petition was filed by Ambuja Cements Limited (hereinafter \"the Petitioner\" or \"ACL\"), challenging the imposition of stamp duty on a merger order under Article 23 of Schedule IA of the Indian Stamp Act, 1899 by Collector of Stamps, Delhi (hereinafter \"Respondent\").

time-read
4 mins  |
December 2024
Acquisition of Plastic Injected Moulding Business from Sundaram Auto helps Pricol Group to a leadership position in Auto Component Sector
M & A Critique

Acquisition of Plastic Injected Moulding Business from Sundaram Auto helps Pricol Group to a leadership position in Auto Component Sector

Recently, Sundaram Auto Components Limited, a wholly owned subsidiary of TVS Motor Company Limited approved the sale of its injection moulded plastic component solutions division to Pricol Precision Products Private Limited, a wholly owned subsidiary of Pricol Limited, as a going concern on a slump sale basis.

time-read
5 mins  |
December 2024
Simplifying the Corporate Structure - Merger of Inox Leasing and Financing with Gujarat Fluorochemicals
M & A Critique

Simplifying the Corporate Structure - Merger of Inox Leasing and Financing with Gujarat Fluorochemicals

The board of Directors of some of Inox group entities have approved a Composite Scheme of Arrangement which provides for first demerger of Wind business of Inox Leasing and Finance Limited being a promoter group entity into Inox Holdings and Investments Limited and subsequently, merger of remaining Inox Leasing and Finance Limited into Gujarat Fluorochemicals Limited to provide direct holding of listed company to the promoters.

time-read
4 mins  |
December 2024
Cement Sector Consolidation Continues: Orient Cement to be acquired by Adani Group's Ambuja Cement
M & A Critique

Cement Sector Consolidation Continues: Orient Cement to be acquired by Adani Group's Ambuja Cement

The shopping spree for the Adani group seems to be unstoppable. Recently, Adani group announced yet another acquisition in the cement space. This time it is Orient Cement Limited.

time-read
3 mins  |
November 2024
ITAT held that the reserve created on amalgamation is capital in nature and not taxable as perquisite
M & A Critique

ITAT held that the reserve created on amalgamation is capital in nature and not taxable as perquisite

Recently, the Income Tax Appellate Tribunal, Mumbai held that the reserve created on amalgamation is capital in nature and not taxable as perquisite.

time-read
4 mins  |
November 2024
Mega Consolidation: SeQuent Scientific and Viyash Lifesciences backed by PE Carlyle Group
M & A Critique

Mega Consolidation: SeQuent Scientific and Viyash Lifesciences backed by PE Carlyle Group

SeQuent Scientific Limited announced a merger which is expected to create a unique & differentiated platform with leading market position in Animal healthcare segment.

time-read
7 mins  |
November 2024
Raymond Group continues Segregation of its Business Verticals
M & A Critique

Raymond Group continues Segregation of its Business Verticals

After successful demerger of \"Lifestyle Business,\" Raymond Limited announced yet another restructuring to unlock further value for stakeholders.

time-read
3 mins  |
August 2024
Ultratech Cements adds India Cement in its shopping cart
M & A Critique

Ultratech Cements adds India Cement in its shopping cart

India's Cement Industry is poised for consolidation. In recent past we have seen multiple large & small acquisitions in cement segment for consolidating positions.

time-read
3 mins  |
August 2024
Valor Estate Limited: "Diversification" to "Sepration" of Hospitality Business
M & A Critique

Valor Estate Limited: "Diversification" to "Sepration" of Hospitality Business

“From investments in hospitality business, the demerger transaction will enable VEL to start its construction in hospitality”

time-read
4 mins  |
August 2024