NCLT JUDGEMENT ON SECTION 194(A) OF THE INCOME-TAX ACT, 1961, SECTION 5(8), 5(8)(A), 5(8)(B), 5(8)(C), 5(8)(D), 5(8)(E), 5(8)(F), 5(8)(G), 5(8)(H), 5(8)(I), 7, 7(5), 9 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016, SECTION 5, 18 OF THE LIMITATION ACT, 1963, SECTION 12 OF THE SECURITIES AND EXCHANGE BOARD OF INDIA ACT, 1992, ARTICLE 137 OF THE LIMITATION ACT, 1963, SECTION 62(1)(A), 68, 179, 186 OF THE COMPANIES ACT, 2013 AND SECTION 25 OF THE EVIDENCE ACT, 1872

Utsav Securities Private Limited Vs. Sunworld Luxury Suites Private Limited, (2020) 05 NCLT CK 0010

NCLT dismissed the application filed by the applicant under Section 7 of the Insolvency and Bankruptcy Code, 2016 ("Code") for initiation of the CIRP against the Corporate Debtor. While dismissing the application NCLT held that At this juncture, we would like to refer to the submissions made on behalf of the Ld. Counsel appearing for the applicant that the 26AS of the Income Tax statement of the applicant shows that the Corporate Debtor has deducted TDS on 31.03.2017 therefore, that is the acknowledgment of the debt. At this juncture, we would like to refer to the decision of the Hon'ble Delhi High Court in the matter of Utility Powertech Limited Vs. Amit Traders, RFA No. 515/2015 decided on 15^th May, 2018 which is based upon the judgment of the Supreme Court in the matter of Commissioner of Income Tax v. Gujarat Fluoro Chemicals (2012) 13 SCC 731 and the Hon'ble Bombay High Court in the matter of S.P. Brothers v. Biren Ramesh Kadakla (2009) 1 Bom CR 453 in which the Hon'ble Delhi High Court held that: "19. On the issue of TDS deduction, the Trial Court may have erred as the settled position is that deduction of TDS does not constitute an admission of liability. The Trial Court may be wrong in holding that the TDS certificate by itself constitutes an admission of liability. This is not so, inasmuch as the TDS can be deducted even on the expectation of estimated liability. Independently of the TDS certificate, the liability of the Defendant is quite clear. The Supreme Court in Commissioner of Income Tax v. Gujarat Fluoro Chemicals (2012) 13 SCC 731 categorically held that "both advance tax as well as TDS are based on estimation of income by the assessee." The Bombay High Court as well, in S.P. Brothers v. Biren Ramesh Kadakla (2009) 1 Bom CR 453 has held that "the issuance of TDS certificates does not amount to an acknowledgement of defendant within the meaning of Section 25 of the Indian Evidence Act.......The TDS certificate is primarily to acknowledge the deduction of tax at source." The judgment dated. 27th November, 2012 in Bigdot Advertising & Communications Pvt. Ltd. v. Union of India [CS(OS) No. 226/2000] was dealing with the question of the person who is liable once the TDS certificate is issued. It is not a precedent on the proposition that if a TDS certificate is issued, it amounts to admission of liability. In light of this, though the deduction of TDS by itself cannot be sufficient to impose liability, but on a totality of facts it is clear that the defendant is liable." When we shall consider the submissions of the applicant in the light of above decisions then we are of the considered view that the issuance of TDS certificate does not amount to an acknowledgement of debt by the Corporate Debtor.