1990 (10) TMI 287 - HC - Companies Law

Summary

Issues:
1. Assessment of tax on properties of a company under liquidation.
2. Interpretation of the definition of "owner" under the Tamil Nadu Urban Land Tax Act.
3. Liability of a company under liquidation for tax under the Act.
4. Impact of proceedings under the Tamil Nadu Urban Land (Ceiling and Regulation) Act on tax liability.
5. Consideration of market value for tax assessment purposes.

Analysis:

The writ petition challenged the assessment of tax on urban lands owned by a company under liquidation. The petitioner argued that a company under liquidation lacks juristic personality, and the assessment of its properties by the official liquidator is unauthorized. The petitioner contended that the assets of a company under liquidation belong to shareholders and contributories collectively, and individual assessment is required based on the number of entitled persons. Additionally, the petitioner raised concerns about the absence of specific reference to "company under liquidation" in the Act's definition of "owner" and questioned the justification for tax liability when properties may vest with the government under another Act.

The court rejected the petitioner's arguments, emphasizing that a company under liquidation retains its existence until a dissolution order is issued. The court explained that the official liquidator manages company affairs temporarily, and properties remain those of the company until distribution orders are obtained. The court clarified that the Act's broad definition of "owner" encompasses entities like a company, even under liquidation, based on inclusive language and legal principles. Therefore, the petitioner's challenge regarding the company's liability for tax under the Act was dismissed.

Regarding the impact of the Tamil Nadu Urban Land (Ceiling and Regulation) Act on tax liability, the court held that until a notification divesting the company's title is issued, tax liability under the Urban Land Tax Act persists. The court also addressed the valuation issue, noting that the government's offer to purchase properties at a specific rate does not automatically dictate the market value for tax assessment. The court upheld the authorities' valuation decisions, citing the petitioner's failure to provide sufficient evidence to challenge them.

In conclusion, the court dismissed the writ petition, finding no merit in the petitioner's arguments. The court declined to interfere with the factual findings of the authorities and upheld the tax assessment on the company's properties under the Act. The petition was dismissed without costs.