Interim resolution professionals (IRPs) and resolution professionals (RPs) have now got the formal recognition of income tax authorities for dealing with the tax matters of the corporates that are undergoing Corporate Insolvency Resolution Process (CIRP) of the Insolvency and Bankruptcy Code (IBC).
The Central Board of Direct Taxes (CBDT) in the Finance Ministry has made it clear that these professionals and liquidators appointed under IBC can now verify the income tax returns to be submitted by an LLP or a company undergoing CIRP.
Verification process
Under the income tax law, the verification process requires a declaration to be signed by such specific person confirming that information given in the return and schedule is correct and complete. So now IRPs and IPs can also sign in such declarations and the earlier stipulation of getting company Director’s signature now stands modified.
“By this notification, the tax authorities have now clarified that an Insolvency Professional is one who plays the role of interim resolution professional, resolution professional and liquidator while dealing with tax matters (technically it is for tax return signing) of the corporate debtor undergoing CIRP or liquidation; which earlier was under the larger umbrella of the term ‘Insolvency Professional,” Ashish Chhawchharia, Resolution professional and Partner at Grant Thornton Bharat, said.
Aseem Chawla, Managing Partner, ASC Legal, said the CBDT move is enabling in nature for the purposes of income tax compliance and would help in the process of filing of income tax returns besides facilitating appearance before the income tax authorities.
It provides that RPs, IRPs and liquidators appointed by the adjudicating authorities can undertake and represent in the income tax matters. The objective is to ensure orderly discharge of tax obligations in time, Chawla added.
Much-needed clarity
Ritesh Kumar S, Executive Director, IndusLaw, said the latest CBDT move (rule amendment) provides much-needed clarity on the role of the RP and also streamlines the process to be followed for achieving compliance.
Lokesh Shah, Partner, Saraf & Partners, said the rule change will streamline the return verification process. Also, now an interim resolution professional, or a resolution professional, or a liquidator appointed by NCLT under IBC can be an authorised representative for income tax assessment purposes. Shah added that the latest CBDT rule amendment seeks to align income tax law with IBC.