NCLAT Eases Liquidation Process with No TDS Requirement


As per the judgement came out in the case between S Kumar’s Nationwide and Chief Commissioner of Income Tax, the National Company Law Appellate Tribunal (NCLAT) ruled that the liquidator is not required to prepare a balance sheet and profit and loss account and get it audited during the liquidation process.

The order was passed on 8th February, 2021 stating that any buyer of property from a liquidator under Insolvency and Bankruptcy Code, 2016 shall not be required to deduct and pay 1% TDS from the sale consideration under Section 194-IA of the Income-tax Act, 1961.

“We are of the view that the liquidator of a company in liquidation under the Code is not required to file income tax return, then there is no question of claiming refund of TDS deducted,” a two-judge bench of Jarat Kumar Jain and Ashok Kumar Mishra said in its order.

Further, the bench also observed that TDS once deducted could not be claimed as refund during liquidation process without filing of return of income of the company under liquidation.

Click here for the official judgement:

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