1972 (4) TMI 7 - HC - Income Tax

Principle of priority of Crown debts - Whether the claim against compensation before Estate Abolition Tribunal is subject to limitation and whether is entitled to priority of Crown debts - Madras Act, XXVI of 1948 provides for payment of compensation which is required to be deposited with the Tribunal and the Tribunal under section 42(1) is directed to deal with claims to or claims enforceable against the compensation. For that purpose, the section prescribes a period of limitation for applications making claims to or enforceable against the compensation and also provides that if the application has not been filed in time, the claim shall cease to be enforceable. It is clear, therefore, that unless the Income-tax Officer had applied within the time limited, which was not the case, he could not claim payment out merely because of the principle of common law that the Union Government is entitled to priority of payment. The common law principle cannot override the provision of section 42

Summary

The High Court of Madras dismissed the appeals by the First Income-tax Officer, Coimbatore, against an order of the Abolition Tribunal. The Tribunal disallowed the applications for payment out of compensation as they were filed out of time, in accordance with Section 42 of Madras Act XXVI of 1948. The court held that the common law principle of Crown's priority does not apply in this case, and the Income-tax Officer was not entitled to claim priority for payment out of compensation. The appeals were dismissed, and no costs were awarded.