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Interpretation of liability to income tax for a company in liquidation. Determining whether a liquidator qualifies as the "principal officer" under the Income-tax Act. Interpretation of Liability to Income Tax: The appeal concerns the liability to income tax of a company in liquidation, specifically regarding interest earned on investments made by the liquidator during the winding-up process. The auditors highlighted the potential income tax liability on the interest received by the liquidator. The company judge held that even after winding-up, the company remains liable to income tax under the Income-tax Act, emphasizing that any income derived during the winding-up attracts income tax liability. This interpretation was not contested in the appeal, affirming the company's continued liability to income tax post liquidation. Qualification of Liquidator as "Principal Officer": The central issue revolves around whether a liquidator of a company in liquidation qualifies as the "principal officer" under the Income-tax Act. The appellant argued that the liquidator, appointed by the court, does not fall within the definition of "principal officer" as per section 2(35) of the Act. The Act defines "principal officer" to include the secretary, treasurer, manager, or agent of the company. The respondent contended that a liquidator could be considered either the manager or agent of the company in liquidation, citing precedents to support this stance. Precedents and Legal Position of Liquidator: The judgment referenced past cases to elucidate the legal position of a liquidator in winding-up scenarios. It highlighted that the liquidator, whether in voluntary or compulsory winding-up, acts as an agent of the company under the court's orders. The liquidator's role involves administering the company's assets and winding up its affairs. The court emphasized that the liquidator, as an officer of the court, represents the company during the winding-up process and is responsible for meeting all company liabilities, including income tax obligations. Consequently, the liquidator can be deemed the "principal officer" of the company for income tax purposes under section 2(35)(a) of the Income-tax Act. Conclusion: The court upheld the decision of the company judge, ruling that the liquidator qualifies as the "principal officer" of the company for income tax matters. Therefore, the liquidator was rightfully directed to file returns before the Income-tax Officer. The appeal was dismissed without costs, affirming the liquidator's role and responsibility in fulfilling income tax obligations during the winding-up process.
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