Insolvency professional need not seek tax dept's NOC during voluntary liquidation process: IBBI

IBBI has said that an insolvency professional handling the voluntary liquidation process does not have to seek any no-objection certificate from the Income Tax Department during the process.

The clarification from the Insolvency and Bankruptcy Board of India (IBBI) comes amid instances where even after providing an opportunity for filing of claims, liquidators are seeking 'No Objection Certificate' (NOC) or 'No Dues Certificate' (NDC) from the tax department.

The Insolvency and Bankruptcy Code or the regulations do not envisage seeking such a NOC/NDC.

In a circular, dated November 15, IBBI cited Section 178 of the Income Tax Act, 1961.

The section obligates the liquidator to fulfil certain income tax-related requirements, explicitly states that the provisions of this section shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force except the provisions of the Code.

''The process of applying and obtaining of such NOC/NDC from the Income Tax Department consumes substantial time and thus militates against the express provisions of the Code, and also defeats the objective of time-bound completion of the process under the Code,'' the circular said.

IBBI said that as per the provisions of the Code and the regulations read with Section 178 of the Income Tax Act, an insolvency professional handling voluntary liquidation process is not required to seek any NOC/NDC from the tax department as part of compliance in the said process.

The circular has been sent to registered insolvency professionals, recognised insolvency professional entities and registered insolvency professionals agencies.

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