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TMI Blog2016 (6) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... to the necessity of approaching the Authority for the waiver of the interest and to allow him to come up before the Insolvency Court in case he suffers an order. Hence, we are of the considered view that the question of waiver could also be considered by the Insolvency Court itself. In case where surplus funds are available, the Company Court distributes such surplus funds to the promoters. Similarly, the Insolvency Court distributes surplus funds to the insolvent or his or her legal heirs. But at that time, the Company Court can as well say that these surplus funds should be paid only towards discharge of the liability on account of interest and/or penalty. With that leverage in mind, we are of the considered view that this question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... J ) These three appeals arise out of a common order passed by the learned Judge sitting in the Insolvency Jurisdiction on three applications taken out by the learned Official Assignee. 2. Heard Mr.N.V.Balaji, learned counsel appearing for the Official Assignee, Mr.J.Narayanaswamy, learned Standing Counsel for the second respondent and Mr.M.Swaminathan, learned Standing Counsel for the third respondent. 3. A lady by name T.R.Bhuvaneswari, who was a partner in a firm that owned a cinema theatre, was adjudged as an insolvent and her share in the partnership firm and in the properties were brought to sale by the learned Official Assignee. Out of the sale proceeds, the Official Assignee set apart one portion representing capital gains t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the above appeals. 8. The short question that arises for consideration in these three appeals is as to whether for the purpose of grant of waiver of interest and/or penalty, the Official Assignee should approach only the Central Board of Direct Taxes or whether the Official Assignee can get appropriate orders under Section 7 of the Presidency Towns Insolvency Act, 1909 or not. 9. Section 7 of the Act 3 of 1909 reads as follows : Power of Court to decide all questions arising in insolvency : Subject to the provisions of this Act, the Court shall have full power to decide all questions or priorities, and all other questions whatsoever. whether of law or fact, which may arise in any case of insolvency coming within the cognizance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s with the liability of the Liquidator to set apart amounts that are payable to the Income Tax Department. Sub-Section (4) of Section 178 makes a Liquidator personally liable, if he failed to set apart an amount, which may become due and payable by a company in liquidation to the Income Tax Department. 13. In S.V.Kondaskar, O.L. and Liquidator of the Colaba Land Mills Co. Ltd. (in liquidation) Vs. V.M.Deshpande and another [(1972) 83 ITR 685], the Supreme Court held that income tax is a debt, which has to rank pari pasu with other debts. The Supreme Court also held that Liquidation Court is not vested with the power to start assessment proceedings for determining the tax liability. The Court further held that no leave is necessary to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Mysore Spun Silk Mills Ltd., (In Liquidation) 68 I.T.R. 695 do not seem to lay down the correct rule of law that the Income-tax Officers must obtain leave of the winding up court for commencing or continuing assessment or reassessment proceedings. 15. Therefore, while there is no impediment for a Statutory Authority like an Assessing Officer to perform the statutory duty imposed upon him, the question of distribution of the sale proceeds of the assets of the company in liquidation or the assets of the insolvent, is vested only upon the Official Liquidator or the Official Assignee, as the case may be. The Official Liquidator functions within the control of the Company Court and the Official Assignee functions and discharges his dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Authority for the waiver of the interest and to allow him to come up before the Insolvency Court in case he suffers an order. Hence, we are of the considered view that the question of waiver could also be considered by the Insolvency Court itself. In case where surplus funds are available, the Company Court distributes such surplus funds to the promoters. Similarly, the Insolvency Court distributes surplus funds to the insolvent or his or her legal heirs. But at that time, the Company Court can as well say that these surplus funds should be paid only towards discharge of the liability on account of interest and/or penalty. 19. With that leverage in mind, we are of the considered view that this question of waiver can be decided by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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