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The Supreme Court has said that it will examine the validity of the Income Tax commissioner's assessment raising a claim of INR 33,000 crore on Jaypee Infratech Ltd (JIL). It noted the endless litigation is impacting over 22,000 homebuyers of the debt-ridden real estate company.
The Court asked the Central Board of Direct Taxes to review the assessment order and submit an affidavit within four weeks. It also issued a notice to the Noida Income Tax commissioner to explain why the order should not be overturned.
The National Company Law Tribunal (NCLT) admitted JIL to insolvency proceedings in August 2017. On March 7, 2023, the NCLT approved the resolution plan of Mumbai-based Suraksha Realty and Lakshadweep Investments and Finance (Suraksha consortium) and allowed them to take over JIL for INR 20,363 crores against overall liquidation value of INR 17,767 crore and complete the remaining projects.
While the resolution plan submitted by the Suraksha consortium was approved by the CoC by majority of 98.66% in June 2021, the Income Tax department belatedly appealed the NCLT order directly before the NCLAT. It notified an additional disputed tax liability of INR. 33,000 crores on JIL in August 2023.
In September 2023, the NCLAT upheld the NCLT order but added the INR 33,000 crore tax liability to Suraksha's resolution plan. It said the liability will not be extinguished because of insolvency proceedings and will become due when demands are raised on yearly basis in a staggered- manner.
Suraksha challenged this NCLAT order, arguing the NCLAT lacked jurisdiction to modify the NCLT and CoC-approved plan. They pleaded that adding such a huge tax burden has jeopardized the insolvency resolution process.
The IT department's petition is the fourth plea filed by an entity against the NCLT order passed on March 7. Last month, Jaiprakash Associates Ltd and its promoter Manoj Gaur approached NCLAT against the NCLT order relating to the distribution of INR 750 crore in the Jaypee Infratech matter. The amount was deposited with the Supreme Court registry by Jaiprakash Associates Ltd (JAL), the erstwhile promoter of JIL, which has been going through insolvency proceedings since August 2017.
Jaypee was given land for development of 500 hectares each in Noida, Greater Noida, Aligarh, Agra and off the expressway. The farmers are seeking compensation for the stretch from Greater Noida to Agra. YEIDA had approved all five conditions of Suraksha Group?s resolution plan to take over stuck realty projects of Jaypee Infratech. However, YEIDA, which has administrative control of the land, said that Suraksha Group should pay the enhanced 64.7% land compensation (INR 1,689 crores) to nearly 10,000 farmers before it takes over assets of Jaypee.
Around 22,000 homebuyers await possession of their homes across different Jaypee projects in Noida and Greater Noida. While Suraksha's takeover provided relief, objections from the Tax department, JAL and YEIDA have stalled progress. The Supreme Court will examine the tax assessment's validity to help resolve the long-running issues.
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