# In the matter of Income Tax Department vs. G. Madhusudhan Rao, RP of Midland Polymers Ltd. & Anr.

> NCLAT judgment dated 2023-12-12. Citation: TCN-2023-NCLAT-00035. The Income Tax Department, as an operational creditor, filed a claim of Rs. 26,06,41,424/- in…

- **Court:** NCLAT
- **Order date:** 12 Dec 2023
- **Citation:** TCN-2023-NCLAT-00035
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/income-tax-department-vs-g-madhusudhan-rao-rp-of-midland-polymers-ltd-anr-af55c1a2

## Summary

### Background

The Income Tax Department, as an operational creditor, filed a claim of Rs. 26,06,41,424/- in the Corporate Insolvency Resolution Process (CIRP). The Resolution Plan allocated only Rs. 5 lakhs to the Appellant, which they challenged. The Adjudicating Authority (National Company Law Tribunal), Indore Bench, had approved the Resolution Plan, leading to this appeal.

## Facts

The Income Tax Department filed a claim of Rs. 26,06,41,424/- in the CIRP as an operational creditor. The Resolution Plan allocated only Rs. 5 lakhs to the Income Tax Department. The Income Tax Department's claim was treated as a contingent liability because an appeal against the assessment order was pending. The Income Tax Department argued that it should be considered a secured operational creditor based on the Supreme Court's judgment in 'State Tax Officer vs. Rainbow Papers Limited'. The Adjudicating Authority had approved the Resolution Plan, leading to the appeal before the NCLAT. The relevance of the pending assessment order appeal is that it impacts the nature of the claim (contingent vs. fixed) and potentially the priority of payment in the resolution plan.

## Issues and analysis

### Issue 1: Whether the allocation of Rs. 5 lakhs to the Income Tax Department in the Resolution Plan was …

**Ratio:** The court held that no error was found in the allocation of Rs. 5 lakhs in the Resolution

…

**Reasoning:** The court noted that the amount of Rs. 5 lakhs allocated to the Appellant was not shown

…

**Interpretation:** The court interpreted the facts to mean that the allocation was reasonable

…

**Application:** The ratio was applied to the specific facts of the case, considering the amount

…

## Parties

- **Judges:** Ashok Bh…; Barun M…; +1 more
- **Appellants:** Income tax…
- **Respondents:** Midland Polymers…; G. Madhusud…

## Timeline

- **2023-08-18 — Order by Adjudicating…**: The Adjudicating Authority (National Company Law Tribunal), Indore Bench, passed an order…
- **2023-12-12 — Hearing…**: Heard Learned Counsel…

---

This is a preview. The full structured summary, issues, precedents and source judgment are available on CaseEase - Legal Intelligence Simplified: https://caseease.in/cases/ibc/nclat-new-delhi/income-tax-department-vs-g-madhusudhan-rao-rp-of-midland-polymers-ltd-anr-af55c1a2