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Issues Involved:
Interpretation of Section 529A of the Companies Act regarding priority of payment in winding up proceedings. Analysis: The judgment deals with appeals against the High Court's order regarding the payment of Income Tax on the sale proceeds of a company's assets in a winding-up scenario. The High Court had directed that no Income Tax was payable until the dues of secured creditors and workmen were fully paid as per Section 529A of the Companies Act. The case involved the sale of assets of a company in liquidation, with proceeds used to settle dues of secured creditors and workmen. The Official Liquidator filed Income Tax Returns, showing no income until the sale of assets in 1996. The High Court upheld the contention that under Section 529A, workmen's dues and debts due to secured creditors must be paid in priority to all other debts in winding up proceedings. The Supreme Court analyzed the provisions of Section 529A, emphasizing its clear and unambiguous language. The section mandates that in winding up a company, workmen's dues and debts due to secured creditors must be paid in priority to all other debts. The court noted that debts due to secured creditors fall under Section 529A(b), reinforcing the priority of payment as per the legislation. The Court rejected the argument that capital gains tax should be treated as liquidation expenses and paid before the dues of workmen and secured creditors, citing Section 530 of the Companies Act. The Court highlighted that Section 530 places revenue taxes below the priority of payment set by Section 529A. It clarified that workmen's dues and debts due to secured creditors must be paid first, even before tax dues to the revenue. By interpreting Sections 529A and 530 together, the Court concluded that the High Court's decision was correct. Consequently, the appeals were dismissed, affirming the priority of payment to secured creditors and workmen in winding up proceedings as outlined in Section 529A of the Companies Act.
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