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The right to Company’s Assets lies with Liquidator over Tax Department: NCLT

The Bankruptcy Court ordered the revenue department that if the liquidator has taken in account his/her tax dues, they cannot attach the assets of a company in liquidation. Under the Insolvency & Bankruptcy Code, liquidator has powers to take over the  assets of the Corporate Debtor, including cash balances etc. as it was ruled by the principal bench of the National Company Law Tribunal in New Delhi. The case between liquidator S Kumars Nationwide Ltd. (SKNL) and the revenue department finally came to an end and rulings came on 15 June, 2020.  The revenue department cannot attached the bank accounts of the corporate debtors. SKNL liquidator Om Prakash Agarwal’s lawyer argued that revenue department previously submitted its claims and they were admitted by the company. Tax dues, as it is, comes under the ambit of operational creditor claims. Agarwal’s lawyer also argued that tax department is entitled to claim dues under the provisions of the IBC, but not permitted to appropriate monies lying in the company’s account with the help of an attachment order. The tribunal also stated that the money held by corporate debtor in his bank account shall be considered as his asset, even in the cases when the order was against that money, as long as the money was lying in the account of the corporate debtor. It does not matter if it is in cash or kind.

 

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