# In the matter of Om Prakash Agrawal, Liquidator of S. Kumars Nationwide Ltd Vs. Chief Commissioner of Income Tax (TDS) & Anr, Company Appeal (AT) (Insolvency) No. 624 of 2020

> NCLAT judgment dated 2021-02-08. Citation: TCN-2021-NCLAT-00374. The case involves an appeal filed by the Appellant Liquidator against an order dated…

- **Court:** NCLAT
- **Order date:** 8 Feb 2021
- **Citation:** TCN-2021-NCLAT-00374
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/om-prakash-agrawal-liquidator-of-s-kumars-nationwide-ltd-vs-chief-commissioner-o-6d57f1f7

## Summary

### Background

The case involves an appeal filed by the Appellant Liquidator against an order dated 11.06.2020 passed by the Adjudicating Authority (National Company Law Tribunal) Principal Bench, New Delhi. The Adjudicating Authority declined to issue direction to the successful bidder (Respondent No. 2) and the Income Tax Authority (Respondent No. 1) not to deduct 1% TDS from the sale consideration. The Liquidator had filed an application before the Adjudicating Authority for direction against the successful bidder (Respondent No. 2) in auction held for sale of assets of the Corporate Debtor and the Income Tax Authority (Respondent No. 1) not to deduct 1% TDS from the sale consideration of Rs. 43 Crores.

## Facts

Om Prakash Agrawal, the Liquidator of S.Kumars Nationwide Limited, filed an appeal against an order passed by the Adjudicating Authority (NCLT), Principal Bench, New Delhi, on June 11, 2020. The order concerned the deduction of 1% TDS (Tax Deducted at Source) from the sale consideration of assets of the Corporate Debtor. The Liquidator sought a direction against the successful bidder (Respondent No. 2) and the Income Tax Authority (Respondent No. 1) to prevent the TDS deduction from the sale consideration of Rs. 43 Crores. The Liquidator argued that the Income Tax dues should be recovered as per the waterfall mechanism outlined in Section 53 of the Insolvency and Bankruptcy Code (IBC). The Liquidator contended that the provision for TDS deduction under Section 194-IA

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## Issues and analysis

### Issue 1: Whether the provisions of u/s 194-IA of the Income Tax Act, 1961 are inconsistent with Section 53 …

**Ratio:** Section 53(1)(e) of the IBC outlines the waterfall mechanism for distributing assets in

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**Reasoning:** The NCLAT reasoned that Section 53 of the IBC starts with a non-obstante clause, giving

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**Interpretation:** The NCLAT interpreted that the legislature intended to give effect to the

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**Application:** The NCLAT applied the ratio to the facts of the case, concluding that the TDS

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## Parties

- **Judges:** Jarat Kuma…
- **Appellants:** Om Prakash…
- **Respondents:** S. Kumars…; Chief Commissioner…
- **Advocates:** Kanishk K…; Anil…; +1 more

## Timeline

- **2020-06-11 — Order by Adjudicating…**: The Adjudicating Authority (National Company Law Tribunal) Principal Bench, New Delhi,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 53 — Distribution of assets](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-53)

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