9911796707
TMI Blog1972 (2) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... company", for making an order requiring the company to pay advance tax under section 210 of the Income-tax Act, 1961, for the assessment year 1972-73. The official liquidator has objected to the grant of leave on the grounds that the company is not obliged to pay income-tax on any income earned by it after the winding-up order and advance tax cannot be paid in preference to the other debts as it is not a preferential claim within the meaning of section 530 of the Companies Act, 1956, hereinafter referred to as "the Act". The arguments before me have, however, been advanced on the assumption that the company is liable to pay income-tax, as the official liquidator and the learned counsel for the interveners want to agitate the question of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact clearly provides for the "retention" of such expenses in priority even to the preferential payments. The sub-section reads as follows: "530. (6) Subject to the retention of such sums as may be necessary for the costs and expenses of the winding-up, the foregoing debts shall be discharged forthwith so far as the assets are sufficient to meet them, and in the case of the debts to which priority is given by clause ( d ) of subsection (1), formal proof thereof shall not be required except in so far as may be otherwise prescribed". As Maugham J. has stated in In re Beni Felkai Mining Co . 's case ( supra ) the phrase "expenses of the liquidation" (or "expenses of the winding-up") is not a term of art, and there is no reason why it sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like the present, where the Income-tax Officer has not notified to the official liquidator any amount of income-tax which would be sufficient to provide fox the tax which is likely thereafter to become payable by the company, it is not permissible for him to get over the omission or mistake by recourse to section 210 of the Income-tax Act. It has been argued that the special provision of section 178 should prevail over the general provision of section 210. The argument has been supported by a reference to Union of India v. India Fisheries ( Private ) Ltd . [1965] 57 I.T.R. 331 ; 35 Comp. Cas. 669 ; [1965] 3 S.C.R. 679 (S.C.) The argument is, however, untenable for the reason that sub-section (2) of section 178 cannot be said to refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Commissioner of Income-tax [1971] 80 I.T.R. 108 (Cal.), and it has been urged that the liability for any debt on account of income-tax is created only after its assessment so that it cannot be proved or paid as a preferential claim. This argument does not appear to me to be based on a proper appreciation of section 4(2) read with sections 207 to 219 of the Income-tax Act, to which reference has been made already, for when the liability to pay the advance tax is there, there is no reason why the official liquidator should not be required to retain the amount payable therefore, under sub-section (6) of section 530, as a part of the expenses of the winding-up, to the exclusion of the claims for the discharge of even the preferential debt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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