The Supreme Court on Monday said it will examine the validity of the commissioner of Income-Tax’s assessment raising a claim of ₹33,000 crore on Jaypee Infratech Ltd (JIL), taking note of the “endless litigation” affecting 22,000 homebuyers of the debt-laden realty company.
It asked the Central Board of Direct Taxes to examine the department’s assessment order and file an affidavit within four weeks.
A bench led by Justice Sanjiv Khanna also issued notice to the Commissioner of Income Tax, Noida, as to why its order should not be quashed.
On March 7 last year, the National Company Law Tribunal (NCLT) approved the resolution plan of Mumbai-based Suraksha Realty and Lakshdeep Investments and Finance (Suraksha consortium) and allowed them to take over JIL for ₹20,363 crore against overall liquidation value of ₹17,767 crore and complete the remaining projects. The tribunal admitted JIL to insolvency proceedings in August 2017.
While the resolution plan submitted by the Suraksha consortium was approved by the CoC by majority of 98.66% in June 2021, the income tax department did not file any objection before the NCLT but chose to appeal directly before the National Company Law Appellate Tribunal (NCLAT) belatedly. Intimation of the disputed tax liability of ₹33,000 crore on account of the revenue subsidy received by the assessee (JIL) was given to the IRP only in August 2020, according to the consortium.
The NCLAT in September 2023 upheld the NCLT’s approval to Suraksha’s resolution plan but modified it by adding the additional past tax liabilities of ₹33,000 crore on the consortium. The appellate tribunal held that the department’s claim of Rs 33,000 crore did not stand extinguished prior to CIRP commencement as this liability did not become due on JIL on passing of the NCLT order in March 2023 but will become due when demands are raised on yearly basis in a staggered manner.
Challenging the NCLAT’s order, the consortium told the SC that the appellate tribunal does not have jurisdiction to modify the resolution plan and the commercial wisdom of the CoC cannot be interfered with.
“Despite crystalizing past tax liability, the NCLAT has imposed additional liability of ₹33,000 crore on the resolution applicant which has completely jeopardised the insolvency resolution process,” senior counsel Mukul Rohatgi and counsel Ankur Saigal argued.
Around 22,000 homebuyers are awaiting completion and possession of their flats across different projects in Noida and Greater Noida, Uttar Pradesh, counsels for homebuyers argued.
