IBC Section 247: Amendments of Act 43 of 1961

Section 247 of Insolvency and Bankruptcy Code, 2016: Amendments of Act 43 of 1961

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

The Income- tax Act, 1961 shall be amended in the manner specified in the Third Schedule.

Legal Commentary & Landmark Judgments: Section 247

Section 247 amends the Income Tax Act, 1961 to align tax recovery, reassessment, and capital gains provisions with insolvency proceedings under the Code.

Subordination of Income Tax Dues: Amends Act 43 of 1961 in the manner specified in the Third Schedule to the Code.
Subject to Code Waterfall: Income tax claims rank strictly as statutory dues under Section 53/178 and cannot claim overriding priority over secured creditors.
Tax Exemptions in Resolution: Paved the way for statutory tax concessions on debt haircuts, carry-forward of business losses, and MAT adjustments in approved resolution plans.

Key Landmark Precedents:

Sundreshwar Realties Pvt. Ltd. (High Court / Supreme Court Rulings): Judicial decisions have confirmed that Income Tax authorities are bound by the statutory subordination effected by Section 247 and cannot demand pre-CIRP tax dues outside the Code.
Paschimanchal Vidyut Vitran Nigam Ltd. v. Raman Ispat (2023) 10 SCC 60: Affirmed that statutory amendments to the Income Tax Act under Section 247 confirm that the sovereign Crown debt priority stands abolished.

Courtroom Practice & Strategic Litigation Guidance:

Assessing officers issuing section 148 / 153C reassessment notices for pre-CIRP years must be informed that all pre-initiation tax claims are permanently extinguished upon resolution plan approval under the clean-slate doctrine.