New Delhi, Dec 7 (PTI) Industry group Assocham todaywrote a letter to Finance Minister Arun Jaitley seeking morepower for the National Company Law Tribunal to grant relief ontax imposed or waive accrued interest on stressed assetsreferred to it under the Insolvency and Bankruptcy Code.
In the letter, Assocham Secretary General D S Rawat saidthat in cases where any outstanding liability inclusive of anyaccrued interest is waived in accordance with the approvedResolution Plan for such entities (the corporate debtor), suchwaiver or writeback may attract tax under both normal andMinimum Alternate Tax (MAT) provisions.
"This will burden the stressed enterprise with hugetransactional tax liability and make the resolution processunviable, as the new resolution applicant and the stressedbusiness have to shell out this additional sum, which in somecases may reach up to 35 per cent of the waived liability,"Rawat wrote.
The NCLT, the chamber suggested, should be authorised togrant relief on such waiver or writeback of outstandingliabilities under normal as well as MAT provisions.
It argued that there are certain provisions of the IncomeTax Act which cast huge tax liabilities in the resolutionprocess, which if required to be discharged in absence ofstatutory protection would defeat the entire purpose ofresolution as there will hardly any money left for revival ofthe asset.
Also, the resolution plan would involve transfer,assignment, issue of shares and securities for infusion ofcapital and transfer of ownership of stressed business andother immovable assets which may not be at the book value orfair market value as defined in the law, said the industrybody.
Assocham held that this may lead to huge transactionaltax liability in the hands of the stressed business or the newresolution applicant on a notional income, jeopardisingviability of the plan. PTI RSNARD.
This is unedited, unformatted feed from the Press Trust of India wire.