Interim Resolution Professionals (IRPs) and Resolution Professionals (RPs) have now received formal recognition from income tax authorities for handling tax matters of companies under the Corporate Insolvency Resolution Process (CIRP) of the Bankruptcy and Bankruptcy Act (IBC). .
The Treasury Department’s Central Board of Direct Taxes (CBDT) has made it clear that these IBC-appointed professionals and liquidators can now review income tax returns submitted by an LLP or a CIRP company.
Review process
Under the Income Tax Act, the review process requires a declaration to be signed by that person confirming that the information provided in the declaration and schedule is correct and complete. IRPs and IPs can now also sign such declarations and the previous provision of receiving the signature of the company director has now been changed.
“With this notice, the tax authorities have now made it clear that a liquidator is a person who takes on the role of preliminary liquidator, liquidator and liquidator in handling tax matters (technically it is to sign the tax return) of the corporate debtor who undergoes a CIRP, takes over or liquidation; which used to be under the broader umbrella of the Insolvency Professional, ”said Ashish Chhawchharia, liquidation expert and partner at Grant Thornton Bharat.
Aseem Chawla, managing partner of ASC Legal, said the CBDT process would inherently allow for income tax compliance and help with filing income tax returns in addition to appearing before income tax authorities.
It provides that RPs, IRPs and liquidators appointed by the judicial authorities can act and represent them in income tax matters. The aim is to ensure the timely and orderly fulfillment of tax obligations, added Chawla.
The much-needed clarity
Ritesh Kumar S, Executive Director, IndusLaw, said the recent CBDT (rule change) movement is providing much-needed clarity about the role of the RP and also streamlining the process that must be followed to achieve compliance.
Lokesh Shah, Partner, Saraf & Partners, said the rule change will streamline the return verification process. In addition, an IBC-appointed Interim Settlement Expert or Settlement Expert or Liquidator may now serve as an authorized agent for income tax assessment purposes. Shah added that the recent change to the CBDT rules aims to align income tax law with the IBC.