Approved Resolution Plan under IBC binds all statutory authorities, extinguishing prior tax claims and terminating pending Income Tax proceedings.

ORDER

1. These cross appeals, comprising Revenue’s appeals for Assessment Years 2011-12 to 2018-19 and 2020-21 respectively, together with the assessee’s appeals for Assessment Years 2012-13 and 2020-21, arise out of the respective orders passed by the learned Commissioner of Income-tax (Appeals). Since all these appeals emanate from a common factual background, involve the same assessee, arise out of substantially identical issues and, more importantly, raise an identical preliminary legal issue having a direct bearing upon the maintainability and survivability of the proceedings themselves, they were heard together and are being disposed of by this consolidated order for the sake of convenience and to avoid repetition of facts and findings. For the purpose of narration, the facts relating to Assessment Year 2014-15, being the lead year from which the dispute originated and upon which the assessments for the other years substantially rest, have been taken as the principal facts, the decision whereon shall govern the remaining appeals also with necessary variations in the respective assessment years.

2. The assessee, presently known as IndusInd General Insurance Company Limited (formerly Reliance General Insurance Company Limited), is engaged in the business of general insurance covering, inter alia, motor, health, marine, fire and allied insurance products. During the relevant period, the assessee was an unlisted subsidiary of Reliance Capital Limited (“RCL”), the holding company, which admittedly held approximately 99.83% of its equity share capital. For the Assessment Year 2014-15, the Assessing Officer framed the assessment making, inter alia, disallowance of expenditure claimed to have been incurred towards payments made to motor vehicle dealers. The same formed the foundation for reassessment proceedings in the earlier assessment years, whereas for the subsequent years similar issues came to be examined in regular scrutiny assessments. The assessee carried the matter in appeal before the learned CIT(A), who granted substantial relief. Aggrieved by the respective appellate orders, both the Revenue as well as the assessee have preferred the present cross appeals before the Tribunal. Although the memorandum of appeals raises several grounds touching upon the merits of the various additions and disallowances, the controversy, as it ultimately unfolded during the course of hearing before us, assumed a significantly different dimension on account of certain supervening events which occurred subsequent to the passing of the impugned appellate orders and which, according to the assessee, go to the very root of the continuation of these proceedings.

3. At the very outset, the learned Counsel appearing on behalf of the assessee raised a preliminary legal issue, which, according to him, strikes at the very maintainability of the present proceedings and, therefore, deserved to be considered before entering into the merits of the various additions forming the subject matter of the appeals. It was submitted that after the filing of the present appeals, the Corporate Insolvency Resolution Process initiated against the holding company, Reliance Capital Limited, culminated in the approval of a Resolution Plan by the Hon’ble National Company Law Tribunal, Mumbai Bench, vide order dated 27.02.2024 passed under Section 31 of the Insolvency and Bankruptcy Code, 2016. Consequent thereto, the assessee, in the appeals filed by it, raised an additional ground, whereas in the Revenue’s appeals it invoked Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, contending that by virtue of the binding effect of the approved Resolution Plan and the reliefs embodied therein, the present proceedings, in so far as they relate to periods preceding the approval of the Resolution Plan, no longer survive for adjudication. It was, therefore, urged that the preliminary legal issue deserves to be adjudicated first, as its determination would have a direct bearing on the very continuance of the present appeals.

4. Having considered the nature of the preliminary objection so raised and the rival submissions addressed before us at the threshold, we are of the considered opinion that the issue requires examination at the very inception, before embarking upon the merits of the various additions and disallowances challenged by either side. The question raised does not involve any disputed investigation of facts but arises out of subsequent undisputed developments founded upon the Resolution Plan approved by the Hon’ble NCLT and the legal consequences flowing therefrom under the provisions of the Insolvency and Bankruptcy Code, 2016. If the assessee’s contention is ultimately found to be legally sustainable, the continuation of the present proceedings on merits would become wholly unnecessary and purely academic. Conversely, if the preliminary objection fails, the Tribunal would thereafter proceed to adjudicate the rival grounds on merits. It is, therefore, both appropriate and judicially expedient to first examine the maintainability of the additional ground and the plea raised under Rule 27 and thereafter determine the legal effect, if any, of the approved Resolution Plan upon the continuation of the present appeals. We accordingly proceed to examine the preliminary issue in the light of the factual background, the statutory framework governing corporate insolvency resolution, the terms of the approved Resolution Plan and the judicial precedents governing the field.

5. The facts giving rise to the aforesaid preliminary issue are largely undisputed and emerge from the record. The assessee was, during the relevant assessment years, a subsidiary of Reliance Capital Limited (“RCL”), the latter holding approximately 99.83 per cent of its equity share capital. RCL, being the promoter and holding company of the assessee as well as other group entities, was admitted into Corporate Insolvency Resolution Process (“CIRP”) pursuant to a petition filed by the Reserve Bank of India under the provisions of the Insolvency and Bankruptcy Code, 2016. The Hon’ble National Company Law Tribunal, Mumbai Bench, by its order dated 06.12.2021 admitted the insolvency petition and declared a moratorium under Section 14 of the Code. During the course of the CIRP, a Resolution Plan submitted by IndusInd International Holdings Limited (“IIHL”) came to be approved by the Committee of Creditors in June, 2023. It is an admitted position that before according its approval, notice was also issued to the Principal Commissioner of Income-tax, who entered appearance and filed objections on behalf of the Income-tax Department, principally with regard to the carry forward of losses under Section 79 of the Income-tax Act. The said objections were considered by the Hon’ble NCLT and ultimately rejected while approving the Resolution Plan by its detailed order dated 27.02.2024. Thus, unlike a case where the Revenue seeks to question the effect of a Resolution Plan without having participated in the insolvency proceedings, the record before us demonstrates that the Income-tax Department was itself a participant before the Adjudicating Authority and its objections stood expressly dealt with before the Resolution Plan attained statutory finality.

6. It is thereafter that the present controversy assumes significance. Subsequent to the approval of the Resolution Plan, and while the present appeals were pending before the Tribunal, the assessee changed its name from Reliance General Insurance Company Limited to IndusInd General Insurance Company Limited with effect from 22.09.2025, and revised Forms No. 36 were filed by both sides reflecting the changed nomenclature. More importantly, the assessee, taking note of the legal consequences flowing from the Resolution Plan approved under Section 31 of the IBC, raised an additional ground in the appeals preferred by it for Assessment Years 2012-13 and 2020-21. In the Revenue’s appeals, the assessee invoked Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963, contending that irrespective of the merits of the individual additions, the appeals themselves had become liable to be disposed of in the light of the binding effect of the approved Resolution Plan. The plea, therefore, was not directed against the correctness of any individual disallowance or addition, but against the very continuation of the pending tax proceedings relating to periods prior to the NCLT approval date. The assessee simultaneously submitted that since the issue arose entirely on account of subsequent undisputed events and rested upon the interpretation of statutory provisions and the approved Resolution Plan, no further investigation into facts was necessary and the issue could appropriately be raised for the first time before the Tribunal. In support of the maintainability of the additional ground and the Rule 27 plea, reliance was placed upon the decisions of the Hon’ble Bombay High Court in Peter Vaz v. CIT [2021] 128

ann.com 180 436 ITR 616 (Bombay)and CIT v. Hazarimal Nagji [1962] 46 ITR 1168 (Bombay).

7. The principal foundation of the assessee’s preliminary objection rests upon the terms of the Resolution Plan itself. According to the assessee, the Resolution Applicant had proceeded on the basis that the principal value of Reliance Capital Limited lay in its investments in its insurance subsidiaries, including the present assessee, and that the successful implementation of the Resolution Plan necessarily envisaged continuation of these entities as viable and financially unencumbered businesses. It was pointed out that the Resolution Plan specifically records that RCL is essentially an investment holding company whose major assets comprise investments in its group entities and that the insurance subsidiaries constitute the principal value drivers of the corporate debtor. It was, therefore, submitted that the Resolution Applicant sought acquisition of the entire group on a “going concern” basis, free from pre-existing liabilities capable of frustrating the implementation of the approved Resolution Plan. The assessee accordingly contended that the Resolution Plan itself recognises the integral position occupied by the subsidiaries within the overall restructuring framework and that the reliefs and concessions incorporated therein were consciously extended not merely to the corporate debtor in isolation but also to its subsidiaries and affiliated entities, of which the present assessee forms an integral part. This, according to the assessee, is the context in which the subsequent clauses of the Resolution Plan are required to be understood.

8. Proceeding on the aforesaid premise, the learned Counsel submitted that the controversy before us no longer survives as an ordinary dispute under the Income-tax Act involving the correctness of individual additions made by the Assessing Officer. The real issue requiring adjudication, according to him, is the legal consequence of the Resolution Plan approved by the Hon’ble NCLT under Section 31 of the IBC and its impact upon the pending tax proceedings relating to assessment years preceding the approval date. It was urged that if the assessee’s interpretation of the Resolution Plan is accepted, the Revenue’s appeals necessarily fail, whereas the assessee’s appeals deserve to be allowed on the preliminary legal issue itself without requiring any examination of the grounds raised on the merits of the additions. Since this contention strikes at the very foundation of the pending proceedings and has the potential to render all remaining issues purely academic, both parties addressed elaborate arguments before us on this preliminary question, which we propose to examine first before considering whether any occasion survives for entering upon the merits of the individual disallowances.

9. Elaborating the preliminary objection, the learned Counsel submitted that the Resolution Plan approved by the Hon’ble National Company Law Tribunal is not merely a commercial arrangement between the successful Resolution Applicant and the Committee of Creditors, but is a statutory instrument which derives its binding force from Section 31 of the Insolvency and Bankruptcy Code, 2016. It was submitted that once the Resolution Plan received the imprimatur of the Adjudicating Authority by order dated 27.02.2024, every stakeholder, including all Government authorities, became bound by the terms and consequences flowing therefrom. Inviting our attention to the relevant clauses of the approved Resolution Plan, it was contended that the Resolution Applicant had consciously sought comprehensive reliefs and concessions so that the corporate debtor, together with its affiliates and subsidiaries, could continue as viable business entities free from legacy disputes and liabilities relating to the period preceding the approval date. It was emphasised that the Resolution Plan cannot be read in a fragmented or isolated manner by referring only to selected clauses; rather, the document has to be construed as a whole, keeping in view its underlying objective of ensuring a successful and effective corporate resolution. According to the learned Counsel, the legislative philosophy of the IBC and the commercial intent reflected in the Resolution Plan unmistakably point towards providing a genuine “fresh start” to the successful Resolution Applicant, and any interpretation which permits continuation of proceedings relating to pre-resolution liabilities would substantially frustrate the very object sought to be achieved by the approved Resolution Plan.

10. Particular emphasis was laid on Clause 9.1.8 of the approved Resolution Plan. Referring to the language employed therein, the learned Counsel submitted that the clause expressly provides that from the NCLT Approval Date, all enquiries, investigations, notices, show cause notices, causes of action, claims, tax proceedings, litigations and all judicial, regulatory or administrative proceedings, whether pending, threatened, present or future, relating to any period prior to the approval date, in connection not merely with the corporate debtor but also with its affiliates, subsidiaries and associate companies, shall stand withdrawn and dismissed. The clause further provides that all liabilities and obligations pertaining to such proceedings shall stand permanently extinguished and that no adverse orders passed in such matters shall apply to the corporate debtor, its affiliates, subsidiaries, associate companies or the successful Resolution Applicant. It was further pointed out that the clause goes a step further by declaring that upon approval of the Resolution Plan, no fresh proceedings of a similar nature can thereafter be initiated or entertained in relation to any period prior to the NCLT approval date. According to the learned Counsel, the language employed is explicit, comprehensive and admits of no ambiguity. The present proceedings admittedly relate to assessment years much prior to 27.02.2024 and, therefore, according to the assessee, squarely fall within the category of proceedings contemplated by Clause 9.1.8. It was thus argued that continuation of the present appeals would run directly contrary to the express stipulations incorporated in the approved Resolution Plan itself. Likewise, reliance was also placed upon Clause 9.1.9, which stipulates that no governmental authority, including any regulatory, judicial or quasi-judicial authority, shall issue any order, direction or judgment in derogation of or contrary to the approved Resolution Plan. It was submitted that the Tribunal, being a quasi-judicial authority functioning under the Income-tax Act, is equally bound to give full effect to the approved Resolution Plan while adjudicating the present appeals.

11. The learned Counsel thereafter invited our attention to the order dated 27.02.2024 passed by the Hon’ble NCLT approving the Resolution Plan. It was submitted that while approving the Resolution Plan, the Adjudicating Authority specifically dealt with the objections raised by the Income-tax Department and thereafter recorded a categorical finding in paragraph 49 that upon approval of the Resolution Plan, all claims, liabilities and obligations pertaining to the period prior to the approval date stand extinguished and that neither the corporate debtor nor the successful Resolution Applicant can thereafter be subjected to any civil, criminal or tax liability relating to the said period, irrespective of whether such claims had been lodged or were capable of arising in future. Learned Counsel submitted that paragraph 49 expressly approved the entire spectrum of reliefs and concessions contained in Clauses 9.1.8 to 9.1.13 of the Resolution Plan. It was further pointed out that although paragraph 49 inadvertently contained a typographical error while referring to the clause numbers, the Hon’ble NCLT, by a subsequent order dated 13.03.2024, corrected the said error and clarified that the approval specifically extended to Clauses 9.1.8 to 9.1.13. According to the assessee, the correction order merely rectified an obvious clerical error and reaffirmed beyond any pale of doubt that the relief contained in Clause 9.1.8 formed an integral part of the Resolution Plan approved by the Adjudicating Authority. It was, therefore, submitted that once the Income-tax Department itself had participated before the Hon’ble NCLT, had raised its objections, and those objections stood rejected before the Resolution Plan attained finality, it is no longer open to the Revenue to contend before this Tribunal that the approved Resolution Plan does not govern or affect the pending incometax proceedings.

12. Continuing his submissions, the learned Counsel pointed out that the scope and effect of the order dated 27.02.2024 came to be examined once again by the Hon’ble NCLT when the Securities and Exchange Board of India sought recall or clarification of paragraph 49 on the ground that the relief granted therein ought to be confined only to Reliance Capital Limited and should not extend to its subsidiaries. The said application came to be dismissed by the Hon’ble NCLT, observing that any such clarification would virtually amount to reviewing the earlier order, a jurisdiction which the Tribunal did not possess. According to the learned Counsel, this subsequent order assumes considerable significance since it demonstrates that the Hon’ble NCLT consciously declined to dilute the width of the relief granted under the approved Resolution Plan. It was further submitted that the practical understanding of the Resolution Plan by other statutory authorities also lends support to the assessee’s interpretation. In this regard, reference was made to proceedings under the GST enactments wherein, according to the assessee, the concerned authorities have either withdrawn pending proceedings or granted consequential relief by accepting that the benefit of the approved Resolution Plan extends to the present assessee as a subsidiary of Reliance Capital Limited. It was submitted that the dispute which ultimately culminated in the impugned additions had its genesis in proceedings initiated by the GST authorities themselves, and therefore, the subsequent understanding adopted by those authorities regarding the legal effect of the Resolution Plan constitutes a relevant surrounding circumstance. On the strength of these facts, it was argued that the Revenue’s appeals deserve to be dismissed and the assessee’s appeals deserve to be allowed solely on the preliminary legal issue without entering into the merits of the various additions.

13. Per contra, the learned DR opposed the preliminary objection and submitted that the approval of the Resolution Plan under the Insolvency and Bankruptcy Code does not, by itself, render the present income-tax proceedings non-maintainable. According to him, the appeals before the Tribunal arise out of assessments validly framed under the provisions of the Income-tax Act and relate to the determination of the assessee’s taxable income for the relevant assessment years. The jurisdiction exercised by the authorities under the Income-tax Act, it was contended, operates in an entirely different statutory field and cannot be regarded as having been eclipsed merely because the holding company underwent Corporate Insolvency Resolution Process. It was further submitted that the assessment proceedings culminated in orders passed in accordance with the statutory scheme of the Income-tax Act, the appellate proceedings had already commenced long prior to the approval of the Resolution Plan, and therefore such proceedings cannot automatically be treated as extinguished unless there exists a clear statutory mandate to that effect. The learned DR also submitted that the additional ground and the plea raised under Rule 27 seek to introduce an altogether new controversy which was neither urged before the Assessing Officer nor before the learned CIT(A), and therefore the Tribunal ought not to permit the assessee to bypass the normal appellate process by raising such an issue for the first time at this stage.

14. The learned DR further contended that the Resolution Plan approved by the Hon’ble NCLT principally governs the rights and liabilities of the corporate debtor and the stakeholders participating in the insolvency resolution process and cannot be construed as obliterating statutory proceedings undertaken under independent enactments unless the language employed unmistakably leads to such a consequence. According to him, the assessee before us is a distinct corporate entity and not the corporate debtor which underwent CIRP. Merely because Reliance Capital Limited was the holding company of the assessee, it does not necessarily follow that every pending tax proceeding relating to the subsidiary would automatically stand extinguished. It was argued that the expressions occurring in the Resolution Plan must receive a reasonable construction consistent with the statutory framework of the Income-tax Act and ought not to be interpreted in a manner that defeats the sovereign power of assessment vested in the tax authorities. The learned DR thus submitted that the assessee’s interpretation enlarges the scope of the Resolution Plan far beyond what was either contemplated or intended by the Hon’ble NCLT.

15. In support of the aforesaid submissions, the learned DR placed considerable reliance upon the judgment of the Hon’ble Supreme Court in S.V. Kondaskar, Official Liquidator v. V.M. Deshpande, ITO [1972] 83 ITR 685 . Referring to the ratio of the said decision, he submitted that proceedings under the Income-tax Act constitute a self-contained statutory code and that assessment proceedings are distinct from proceedings relating to recovery or enforcement of tax dues. It was argued that the Hon’ble Supreme Court has recognised the independent jurisdiction of the income-tax authorities to determine taxable income notwithstanding proceedings pending before the Company Court and, therefore, the mere existence of insolvency or analogous proceedings cannot denude the authorities functioning under the Income-tax Act of their statutory jurisdiction to determine the correct tax liability of an assessee. According to the learned DR, the principles emerging from the aforesaid decision clearly demonstrate that assessment and appellate proceedings under the Income-tax Act continue to operate within their own statutory domain and cannot be regarded as having abated merely because proceedings under another enactment are pending or have culminated in the approval of a resolution plan. He accordingly submitted that the preliminary objection deserves to be rejected and the appeals should thereafter be decided on their respective merits.

16. We have given our thoughtful consideration to the rival submissions advanced before us and have carefully examined the material placed on record, including the Resolution Plan approved by the Hon’ble National Company Law Tribunal, the orders passed by the NCLT on 27.02.2024 and 13.03.2024, the decisions cited at the Bar and the statutory provisions governing the controversy. In our considered opinion, before examining the true scope and legal effect of the Resolution Plan, it would first be necessary to determine whether the additional ground raised by the assessee in its appeals and the plea advanced under Rule 27 in the Revenue’s appeals are maintainable in law. This issue assumes significance because unless the Tribunal is satisfied that the preliminary legal objection can appropriately be entertained at this stage, the larger question regarding the effect of the approved Resolution Plan would not arise for adjudication. It is, therefore, to this aspect that we now proceed.

17. At the outset, we find no merit in the objection of the Revenue regarding the maintainability of the additional ground raised by the assessee or the plea advanced under Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963. It is now well settled that the powers of the Tribunal under section 254 of the Act are sufficiently wide to entertain a pure question of law, particularly where such a question goes to the very root of the matter, arises from undisputed facts already available on record and does not require any fresh investigation into factual aspects. The jurisdiction of the Tribunal, being the final fact-finding authority under the Act, is not confined merely to adjudicating the grounds originally urged before the lower authorities, but extends to deciding every legal issue which is necessary for a complete and effective adjudication of the controversy before it. The object of the appellate jurisdiction is not merely to examine the correctness of the conclusions reached by the subordinate authorities but also to ensure that the final decision accords with the correct legal position prevailing on the date of adjudication. If, during the pendency of appellate proceedings, subsequent statutory events or judicial developments fundamentally alter the legal complexion of the dispute, the Tribunal would not only be justified but would, in appropriate cases, be duty-bound to take cognizance of such subsequent events so that its decision reflects the law as it stands on the date of disposal of the appeal rather than the law as it existed on the date of assessment.

18. In the present case, the preliminary objection raised by the assessee does not seek to introduce any new factual controversy nor does it require the parties to adduce any additional evidence beyond what already forms part of the record. The entire foundation of the additional ground rests upon the Resolution Plan approved by the Hon’ble National Company Law Tribunal on 27.02.2024, the subsequent correction order dated 13.03.2024 and the statutory consequences flowing therefrom under Section 31 of the Insolvency and Bankruptcy Code, 2016. None of these facts are in dispute. The approval of the Resolution Plan is an admitted event; the participation of the Income-tax Department before the Hon’ble NCLT is equally undisputed; the orders of the Hon’ble NCLT are matters of record; and the interpretation sought by the assessee is founded entirely upon statutory provisions and judicial precedents. The controversy, therefore, is purely legal in nature. It neither necessitates recording of evidence nor requires verification of disputed factual assertions. It is precisely this class of legal issues which the appellate forum is competent to entertain at any stage of the proceedings, particularly when the determination thereof may itself conclude the entire litigation without requiring examination of the remaining grounds on merits.

19. The decisions ofthe Hon’ble Bombay High Court relied upon by the learned Counsel also lend complete support to the aforesaid view. In Peter Vaz case (supra), the Hon’ble High Court reiterated that a pure question of law arising from undisputed facts can legitimately be raised before the Tribunal even if such a plea had not been urged before the authorities below. Similarly, in Hazarimal Nagji & Co.(supra), it was recognised that the appellate authority is not precluded from considering a legal contention merely because it had not been advanced at an earlier stage, provided the material necessary for deciding the issue already exists on record. These principles have consistently guided the exercise of appellate jurisdiction under the Income-tax Act and have been repeatedly invoked to permit additional legal grounds where the ends of justice so require. The present case, in our considered opinion, falls squarely within the ambit of the aforesaid principles. The issue raised before us concerns the legal consequences flowing from an approved Resolution Plan under the Insolvency and Bankruptcy Code and the binding effect thereof upon pending income-tax proceedings. Such an issue undoubtedly goes to the very root of the maintainability of the present appeals and deserves adjudication before any discussion on the merits of the additions is undertaken.

20. We are also unable to accept the contention of the Revenue that entertaining the present plea would in any manner prejudice its case or enlarge the scope of the appeal beyond permissible limits. On the contrary, declining to examine a pure question of law arising from undisputed subsequent events would compel the Tribunal to undertake an elaborate adjudication on the merits of several additions which may ultimately prove to be wholly academic if the assessee succeeds on the preliminary issue. Judicial discipline demands that where a foundational legal issue is capable of disposing of the entire controversy, the same should ordinarily receive consideration at the threshold before embarking upon issues of fact or computation. Such an approach not only promotes judicial economy but also avoids rendering findings on questions which may never survive for consideration. We, therefore, hold that the additional grounds raised by the assessee in its appeals deserve to be admitted and that the plea advanced under Rule 27 in the Revenue’s appeals is equally maintainable. Having held so, we now proceed to examine the principal question, namely, the true scope and legal effect of the Resolution Plan approved by the Hon’ble National Company Law Tribunal under Section 31 of the Insolvency and Bankruptcy Code, 2016, and whether the continuation of the present income-tax proceedings is compatible with the statutory consequences flowing therefrom.

21. Having admitted the additional ground and the plea raised under Rule 27, we now proceed to examine the substantive legal issue arising therefrom. At the outset, it would be apposite to bear in mind that the controversy before us is not concerned with the correctness of the individual additions made in the respective assessment years. Equally, we are not called upon to examine the evidentiary basis of the disallowances or the findings recorded by the Assessing Officer or the learned CIT(A). The controversy lies at a more fundamental level. The core question requiring adjudication is whether, after the approval of the Resolution Plan by the Hon’ble National Company Law Tribunal under Section 31 of the Insolvency and Bankruptcy Code, 2016, the present proceedings under the Income-tax Act, relating to periods preceding the approval date, can legally continue or whether they stand rendered incapable of further adjudication by reason of the statutory consequences flowing from the approved Resolution Plan. In other words, the issue before us is one concerning the interface between two Parliamentary enactments, namely, the Income-tax Act, 1961 and the Insolvency and Bankruptcy Code, 2016, and the extent to which the latter, upon culmination of the corporate insolvency resolution process, governs pending tax proceedings relating to antecedent periods.

22. Before adverting to the specific clauses of the Resolution Plan, it is necessary to appreciate the legislative architecture of the Insolvency and Bankruptcy Code. The enactment represents a comprehensive legislative framework intended to facilitate revival of financially distressed corporate entities through a time-bound resolution process rather than their liquidation. The emphasis of the Code is not merely upon recovery of debts but upon preservation of economically viable enterprises by enabling a successful Resolution Applicant to take over the business as a going concern. The resolution process envisaged by the Code is, therefore, fundamentally different from recovery proceedings under ordinary civil or fiscal statutes. Once a Resolution Plan is approved in accordance with the statutory procedure prescribed under the Code, the rights and obligations of all stakeholders thereafter stand regulated by the terms of the approved plan. This legislative objective would stand substantially diluted if liabilities relating to periods antecedent to the approval date were permitted to continue indefinitely outside the framework of the approved Resolution Plan, thereby exposing the successful Resolution Applicant to uncertainties which were neither contemplated nor factored into the commercial resolution process.

23. It is in this statutory backdrop that Section 31 of the Insolvency and Bankruptcy Code assumes central importance. Sub-section (1) thereof unequivocally provides that once the Adjudicating Authority approves the Resolution Plan, the same shall be binding upon the corporate debtor, its employees, members, creditors, guarantors and the Central Government, any State Government and every local authority to whom statutory dues may be payable. The legislative intent is manifest. Parliament has consciously accorded overriding statutory sanctity to an approved Resolution Plan so that, upon its approval, all stakeholders are governed by a common and binding framework. Significantly, the binding effect is not confined merely to private creditors but expressly extends to governmental authorities as well. The inclusion of the Central Government and statutory authorities within the ambit of Section 31 is neither incidental nor surplusage; rather, it reflects the legislative determination that governmental claims, including fiscal claims, cannot remain outside the discipline of an approved Resolution Plan. Once the statutory mandate operates, every authority exercising jurisdiction under any enactment is obliged to give due effect to the Resolution Plan in accordance with its true import and cannot proceed in a manner inconsistent therewith.

24. The Resolution Plan approved by the Hon’ble NCLT in the present case has to be understood in the aforesaid statutory setting. It is not a private contractual arrangement between the Resolution Applicant and the Committee of Creditors; nor is it merely a commercial understanding inter se the stakeholders. Upon receiving approval under Section 31, the Resolution Plan acquires statutory force and derives enforceability directly from the provisions of the Insolvency and Bankruptcy Code. Consequently, while examining its effect, this Tribunal is not sitting in appeal over the commercial wisdom underlying the Resolution Plan, nor is it concerned with its desirability. The only enquiry before us is whether the legal consequences expressly flowing from the approved Resolution Plan encompass the present proceedings. That enquiry must necessarily be answered by reading the Resolution Plan harmoniously with the provisions of the IBC and by giving due regard to the language employed by the Hon’ble NCLT while according its approval. It is, therefore, to the relevant clauses of the approved Resolution Plan and the order dated 27.02.2024 of the Hon’ble NCLT that we shall now advert.

25. A careful reading of the Resolution Plan leaves little scope for ambiguity as regards the breadth of the reliefs and concessions which came to be incorporated therein. Clause 9.1.8, upon which considerable emphasis has been laid by the learned Counsel, is couched in language of considerable amplitude. The clause expressly provides that from the NCLT Approval Date, all enquiries, investigations, notices, show cause notices, causes of action, claims, tax proceedings, litigations and all judicial, regulatory or administrative proceedings, whether pending, threatened, present or future, in relation to any period prior to the approval date, concerning the corporate debtor, its affiliates, subsidiaries and associate companies, shall stand withdrawn and dismissed. The clause further stipulates that all liabilities and obligations arising therefrom shall be deemed to have been permanently extinguished and that no adverse orders passed in such proceedings shall thereafter apply either to the corporate debtor, its affiliates, subsidiaries or associate companies or to the successful Resolution Applicant. It also declares that after the approval of the Resolution Plan, no fresh enquiries or proceedings of a similar nature shall be initiated or entertained in relation to any period anterior to the approval date. Thus, the clause does not merely deal with the recovery or enforcement of existing liabilities but expressly addresses the very continuation of pending proceedings and the initiation of future proceedings concerning periods preceding the NCLT approval date. The language employed is comprehensive and leaves little room for importing limitations which the Resolution Plan itself does not envisage.

26. Equally significant is Clause 9.1.9 of the approved Resolution Plan, which provides that no governmental authority, including any regulatory, judicial or quasi-judicial authority, shall issue any order, direction, decree or judgment in contravention of the Resolution Plan. This stipulation cannot be read in isolation or treated as a mere ancillary provision. It is intended to ensure that once the Resolution Plan has attained statutory finality under Section 31 of the Insolvency and Bankruptcy Code, every authority exercising statutory or quasi-judicial functions gives full effect to the legal consequences flowing therefrom. The Tribunal, though constituted under the Income-tax Act, undoubtedly exercises quasi-judicial functions and is equally bound to decide matters consistently with the statutory effect of an approved Resolution Plan. The issue before us, therefore, is not whether this Tribunal is denuded of its appellate jurisdiction under the Income-tax Act; rather, the question is whether that jurisdiction can be exercised in a manner inconsistent with the legal consequences expressly recognised by an approved Resolution Plan having statutory force under Section 31 of the IBC. In our considered opinion, once the Resolution Plan has acquired binding force under the statute, every adjudicatory forum is required to give effect to its provisions in their true letter and spirit, unless the Resolution Plan itself is modified or set aside by a competent forum. Neither the Revenue nor this Tribunal can proceed on the premise that the Resolution Plan is to be ignored while adjudicating pending tax disputes relating to the pre-approval period.

27. The aforesaid interpretation also receives considerable reinforcement from the order dated 27.02.2024 passed by the Hon’ble National Company Law Tribunal while approving the Resolution Plan. It is not in dispute that before approving the Resolution Plan, the Hon’ble NCLT considered the objections filed by the Income-tax Department, including the objections relating to carry forward of losses under Section 79 of the Income-tax Act, and thereafter rejected the same. More importantly, while dealing with the reliefs and concessions incorporated in the Resolution Plan, the Hon’ble NCLT, in paragraph 49 of its order, unequivocally held that upon approval of the Resolution Plan, all claims, liabilities and obligations against the corporate debtor relating to the period prior to the approval date stand extinguished and that neither the corporate debtor nor the successful Resolution Applicant can thereafter be saddled with any liability, whether existing or arising subsequently, in respect of such period. The Adjudicating Authority further approved the reliefs and concessions contained in the relevant clauses of the Resolution Plan, thereby according judicial imprimatur to the consequences flowing therefrom. Though paragraph 49 initially contained an inadvertent typographical reference to certain clause numbers, the Hon’ble NCLT, by its subsequent order dated 13.03.2024, corrected the said error and clarified that the approval extended, inter alia, to Clauses 9.1.8 to 9.1.13. The correction order did not enlarge or modify the original relief; it merely removed an obvious clerical inaccuracy so that the operative portion of the order accurately reflected the clauses which had in fact been approved.

28. Another circumstance which, in our view, assumes considerable significance is that the width of paragraph 49 subsequently came to be questioned before the Hon’ble NCLT itself. As noticed earlier, the Securities and Exchange Board of India sought recall or clarification of the order on the ground that the relief granted therein ought to be confined only to Reliance Capital Limited and should not extend to its subsidiaries. The Hon’ble NCLT declined to accede to the said request, holding that any such clarification would, in substance, amount to reviewing its earlier order, a jurisdiction not vested in it. The inevitable consequence of the said order is that the interpretation sought to be canvassed before us by the Revenue, namely that the benefit of the Resolution Plan should be restricted only to the corporate debtor and not to its subsidiaries, is contrary to the manner in which the Hon’ble NCLT itself understood its own order. We are unable to persuade ourselves to adopt an interpretation which would have the effect of indirectly narrowing the scope of the approved Resolution Plan when the very Adjudicating Authority which approved the Resolution Plan has declined to do so. The subsequent conduct of other statutory authorities, including the GST authorities, who are stated to have acted upon the approved Resolution Plan by withdrawing or dropping proceedings relating to the assessee, may not by itself determine the legal issue before us; nevertheless, it does indicate that the Resolution Plan has been understood and implemented by other governmental authorities in a manner broadly consistent with the interpretation canvassed by the assessee. This constitutes an additional surrounding circumstance which cannot be altogether ignored while construing the legal effect of the approved Resolution Plan.

29. The statutory effect of an approved Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code is no longer res integra. The controversy stands authoritatively settled by the judgment of the Hon’ble Supreme Court in Ghanashyam Mishra & Sons (P.) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. 166 SCL 237 (SC). The Hon’ble Supreme Court, after an exhaustive analysis of the scheme of the Insolvency and Bankruptcy Code and the legislative amendments brought about therein, held in unequivocal terms that once a Resolution Plan is approved by the Adjudicating Authority under Section 31, the claims provided in the Resolution Plan alone survive and become binding upon the corporate debtor, its creditors and every statutory authority, including the Central Government and the State Governments. Equally significant is the declaration that all claims which do not form part of the approved Resolution Plan stand extinguished on the approval date and no person is thereafter entitled either to initiate or continue any proceedings in respect of such claims. The emphasis laid by the Hon’ble Supreme Court is not merely upon the extinguishment of monetary claims but upon the finality and binding nature of the Resolution Plan itself. The Court observed that unless such finality is accorded to an approved Resolution Plan, no successful Resolution Applicant would be willing to undertake the revival of a distressed corporate entity while remaining exposed to uncertain and indeterminate liabilities arising from periods antecedent to the approval of the Resolution Plan. The doctrine evolved by the Hon’ble Supreme Court is, therefore, founded upon the larger legislative objective of ensuring certainty, commercial efficacy and successful implementation of the insolvency resolution process.

30. Applying the aforesaid principles to the facts before us, we find that the present case stands on an even stronger footing. Here, the Resolution Plan itself specifically incorporates Clause 9.1.8 dealing with pending tax proceedings and Clause 9.1.9 restraining governmental and quasi-judicial authorities from acting in derogation of the approved Resolution Plan. Furthermore, the objections raised by the Income-tax Department were specifically considered and rejected by the Hon’ble NCLT before approving the Resolution Plan. Thus, the Revenue is not merely confronted with the general statutory consequence flowing from Section 31 of the IBC as explained in Ghanashyam Mishra; it is also faced with the express terms of the Resolution Plan approved after considering its own objections. In these circumstances, permitting the present proceedings to continue in respect of assessment years admittedly preceding 27.02.2024 would directly undermine both the statutory mandate contained in Section 31 and the specific directions embodied in the approved Resolution Plan. Such a course would, in substance, permit the Revenue to achieve indirectly what it could not secure before the Adjudicating Authority while opposing the approval of the Resolution Plan. The underlying rationale behind the doctrine commonly described as the “clean slate” principle also merits brief notice. The object of the Insolvency and Bankruptcy Code is not merely to facilitate resolution of outstanding debts but to revive a financially distressed enterprise by enabling the successful Resolution Applicant to acquire and operate the business with commercial certainty. Such certainty would be wholly illusory if, after approval of the Resolution Plan, statutory authorities were permitted to revive or continue proceedings relating to liabilities of the preresolution period which either stood dealt with or stood extinguished under the approved Resolution Plan. The legislative scheme, therefore, seeks to ensure that the successful Resolution Applicant commences the revived enterprise on a legally certain foundation, free from indeterminate liabilities capable of frustrating the implementation of the Resolution Plan. It is this legislative objective which underlies the binding effect accorded by Section 31 of the Code and which has repeatedly been recognised by the Hon’ble Supreme Court while interpreting the provisions of the Insolvency and Bankruptcy Code.

31. The aforesaid legal position has thereafter been consistently followed by the Hon’ble Bombay High Court while dealing with proceedings under the Income-tax Act. In AMNS Gandhidham Ltd. v. ACIT Writ Petition No. 1435 of 2025 (Bombay), the Hon’ble High Court, following the ratio of Ghanashyam Mishra, held that assessment proceedings relating to periods covered by an approved Resolution Plan could not be permitted to continue. Similar views have been expressed in AMNS Khopoli Ltd. v. Asstt.CIT [2024]   (Bombay), Uttam Galva Metallics Ltd. v. Asstt.CIT  (Bombay)(Bombay), and Uttam Value Steels Ltd. v. Asstt.CIT [2024]  186 SCL 70 (Bombay), where reassessment notices, assessment proceedings and proceedings under Section 153C, as the case may be, were interfered with on the ground that the claims pertaining to the pre-resolution period stood concluded by virtue of the approved Resolution Plan. Though the factual matrix in each of these decisions may not be identical, the underlying principle emerging therefrom is uniform, namely that the statutory consequences flowing from an approved Resolution Plan cannot be diluted by continuing proceedings relating to liabilities which stand governed by the Resolution Plan. Being decisions of the jurisdictional High Court rendered in the context of the very enactments with which we are concerned, they deserve due weight and, in our respectful opinion, fully reinforce the conclusion that the Revenue cannot pursue proceedings inconsistent with the approved Resolution Plan merely because such proceedings arise under the Income-tax Act. What clearly emerges from the aforesaid line of authorities is that once an approved Resolution Plan acquires finality under Section 31 of the IBC, proceedings under the Income-tax Act relating to liabilities of the pre-resolution period cannot be viewed in isolation from the legal consequences flowing from the Resolution Plan. The Incometax authorities undoubtedly continue to exercise jurisdiction under the Act; however, such jurisdiction must necessarily operate within the statutory framework created by the IBC and cannot be exercised in a manner which defeats the binding effect of an approved Resolution Plan.

32. We shall now deal with the principal contention advanced on behalf of the Revenue founded upon the decision of the Hon’ble Supreme Court in S. V. Kondaskar case (supra). In our considered opinion, the reliance placed upon the said judgment is entirely misplaced and proceeds on a misconception of both the factual backdrop as well as the legal principle decided therein. The controversy before the Hon’ble Supreme Court in S. V. Kondaskar case (supra) arose under the provisions of the Companies Act, 1956 in the context of winding-up proceedings. The issue before the Court was a narrow one, namely, whether the Income-tax Officer was required to obtain leave of the Company Court under Section 446 of the Companies Act before initiating or continuing assessment proceedings against a company ordered to be wound up. It was in that context that the Hon’ble Supreme Court observed that the Income-tax Act constitutes a self-contained code for assessment of taxable income and that the Company Court exercising jurisdiction in winding-up proceedings could not assume the statutory functions entrusted to the Income-tax authorities. The Court was not called upon to examine the effect of a statutory resolution plan approved under a subsequent Parliamentary enactment, nor was it concerned with the legal consequences flowing from an express statutory provision akin to Section 31 of the Insolvency and Bankruptcy Code. The ratio of that decision, therefore, cannot be divorced from the precise issue which arose for determination and mechanically transplanted into an entirely different statutory framework enacted several decades thereafter.

33. The distinction between the legal regime governing liquidation under the Companies Act and the corporate insolvency resolution mechanism under the Insolvency and Bankruptcy Code is both fundamental and substantive. Liquidation under the Companies Act contemplates the eventual dissolution of the corporate entity after realisation and distribution of its assets. The Corporate Insolvency Resolution Process under the IBC, on the other hand, is premised upon the preservation and revival of the corporate enterprise as a going concern through an approved Resolution Plan having statutory force. Parliament has consciously incorporated Section 31 into the IBC to ensure that once the Resolution Plan receives approval from the Adjudicating Authority, every stakeholder, including Government authorities, remains bound by its terms so that the successful Resolution Applicant is not subsequently confronted with unresolved liabilities pertaining to periods anterior to the approval date. It is precisely this statutory consequence which did not exist under the Companies Act, 1956 and, therefore, never arose for consideration before the Hon’ble Supreme Court in S. V. Kondaskar case (supra). Consequently, the observations made therein regarding the independent jurisdiction of the Income-tax authorities cannot be read as authority for the proposition that proceedings under the Income-tax Act may continue notwithstanding an approved Resolution Plan which, by virtue of Section 31 of the IBC, has become binding upon all concerned, including the Central Government itself.

34. In fact, the subsequent decision of the Hon’ble Supreme Court in Ghanashyam Mishra & Sons (P.) Ltd. case (supra) represents the authoritative exposition of the legal position under the Insolvency and Bankruptcy Code and directly addresses the issue which confronts us in the present appeals. The principles enunciated therein are not in conflict with S. V. Kondaskar; rather, they operate in an altogether different statutory setting. While S. V. Kondaskar dealt with the limited question of jurisdiction during winding-up proceedings under the Companies Act, Ghanashyam Mishra examines the consequences of approval of a Resolution Plan under Section 31 of the IBC and declares, in unequivocal terms, that upon such approval, all claims not forming part of the Resolution Plan stand extinguished and no proceedings in respect thereof can thereafter be initiated or continued. Once Parliament has enacted a special legislation providing a comprehensive insolvency resolution framework and the Hon’ble Supreme Court has authoritatively interpreted its legal consequences, the controversy before us necessarily falls to be governed by the latter exposition of law. We are, therefore, unable to accept the Revenue’s submission that the ratio of S. V. Kondaskar either dilutes or overrides the statutory effect of an approved Resolution Plan under the Insolvency and Bankruptcy Code. The submission of the Revenue, if accepted, would virtually render Section 31 of the Insolvency and Bankruptcy Code otiose insofar as proceedings under the Income-tax Act are concerned, a consequence which neither flows from the language of the statute nor finds support from the decisions of the Hon’ble Supreme Court.

35. Having examined the statutory framework, the terms of the approved Resolution Plan, the orders passed by the Hon’ble National Company Law Tribunal and the judicial precedents governing the field, we are left with no manner of doubt that the preliminary objection raised by the assessee deserves to succeed. The Resolution Plan approved on 27.02.2024 has attained finality. The Income-tax Department was admittedly a participant in the proceedings before the Hon’ble NCLT; its objections were considered and rejected; the reliefs and concessions embodied in the Resolution Plan, including Clauses 9.1.8 and 9.1.9, received judicial approval; the subsequent correction order dated 13.03.2024 removed any possible ambiguity regarding the clauses approved; and the attempt to confine the benefit of the Resolution Plan only to the corporate debtor, to the exclusion of its subsidiaries, was not accepted by the Hon’ble NCLT. In these circumstances, permitting the present appeals to proceed on merits in relation to assessment years admittedly preceding the NCLT approval date would not only be inconsistent with the express terms of the approved Resolution Plan but would also run contrary to the statutory mandate contained in Section 31 of the Insolvency and Bankruptcy Code as interpreted by the Hon’ble Supreme Court and consistently followed by the Hon’ble Bombay High Court. The Tribunal, being a quasi-judicial authority, is bound to give full effect to the legal consequences flowing from the approved Resolution Plan and cannot render a decision which would have the effect of defeating or diluting the binding force accorded thereto by law.

36. Once we arrive at the aforesaid conclusion, the legal consequence follows as a matter of necessary corollary. The present batch of appeals pertains to Assessment Years 201112 to 2018-19 and 2020-21, all of which admittedly relate to periods much prior to 27.02.2024, being the date on which the Hon’ble National Company Law Tribunal approved the Resolution Plan under Section 31 of the Insolvency and Bankruptcy Code, 2016. The disputes raised in these appeals, irrespective of their individual factual complexion, arise out of assessment proceedings pertaining to a period antecedent to the approval of the Resolution Plan. In view of the conclusions recorded hereinabove, we are of the considered opinion that the continuation of these proceedings would be wholly incompatible with the statutory consequences flowing from the approved Resolution Plan. It is not for this Tribunal to reexamine the commercial wisdom underlying the Resolution Plan or to carve out exceptions which neither the Resolution Plan nor the order of the Hon’ble NCLT contemplates. Once the Resolution Plan has attained finality and has become binding upon all concerned by virtue of Section 31 of the IBC, every statutory authority, including this Tribunal, is obliged to give effect to its legal consequences in their entirety. Any contrary course would not merely dilute the efficacy of the Resolution Plan but would also undermine the certainty and finality which constitute the very foundation of the insolvency resolution framework.

37. We may also observe that considerable arguments were addressed by both sides on the merits of the various additions and disallowances forming the subject matter of the respective appeals. However, having held that the assessee succeeds on the preliminary legal issue, we consciously refrain from expressing any opinion on the correctness or otherwise of the findings recorded by the Assessing Officer or the learned CIT(A) on the merits of those additions. Any adjudication on such issues, after recording our conclusion on the preliminary issue, would be purely academic and unnecessary for the disposal of the present appeals. It is a well-recognised principle governing judicial decision-making that a court or tribunal should confine itself to deciding only those issues which are necessary for the effective adjudication of the lis and should avoid rendering findings on questions which do not survive for determination. Any observation on the merits at this stage may unnecessarily prejudice either party in future proceedings, if any, and would therefore be wholly inappropriate. We, therefore, leave all the grounds urged by the respective parties on the merits of the additions open without expressing any opinion thereon.

38. Accordingly, the additional grounds raised by the assessee in ITA Nos. 1616/Mum/2025 and 2776/Mum/2025 are admitted and allowed. Likewise, the plea raised by the assessee under Rule 27 of the Income-tax (Appellate Tribunal) Rules, 1963 in the Revenue’s appeals is accepted. Consequently, the assessee’s appeals are allowed on the preliminary legal issue arising out of the Resolution Plan approved by the Hon’ble National Company Law Tribunal by order dated 27.02.2024, whereas the Revenue’s appeals, being unsustainable in view of the binding effect of the said Resolution Plan, are dismissed. Consequently, the assessee’s appeals succeed on the preliminary legal issue and the Revenue’s appeals fail for the same reason. Since the entire batch of appeals stands disposed of on the aforesaid jurisdictional issue arising from the approved Resolution Plan, none of the grounds relating to the merits of the additions, disallowances or other issues survive for adjudication. We accordingly refrain from expressing any opinion thereon, and all such issues are left open, having been rendered academic in the present proceedings.

39. In the result, ITA Nos. 1616/Mum/2025 and 2776/Mum/2025 filed by the assessee are allowed on the preliminary legal issue. ITA Nos. 1378 to 1385/Mum/2025 and ITA No. 4967/Mum/2025 filed by the Revenue are dismissed. Ordered accordingly.