9911796707
TMI Blog2002 (10) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication, it is stated that the report of the official liquidator dated November 1, 2001, shows that totally a sum of Rs. 2,07,67 007 is due by the company to the various authorities enumerated therein and the individual creditors. The factual position of the various amounts due to the Department is as follows: The demand for wealth-tax for the periods 1984-85 to 1992-93 is stated to be Rs. 59,49,151. The interest component claimed under section 31(2) of the Wealth-tax Act, 1957, for non-payment of the demand within 35 days thereof is stated to be Rs. 91,13,057. The total amount claimed is Rs. 1,50,62,248. The demand for income-tax for the periods 1972-73 to 1997-98 is stated to be Rs. 6,94,122. The interest component claimed under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay the admitted or actual amount. The demand for payment of interest is not justifiable and is liable to be waived. The balance of convenience is in favour of waiving the demand for payment of interest. No prejudice will be caused to any person or authority if the same is waived. Though the applicant has furnished details regarding property tax, urban land tax, water tax, commercial tax, etc., it is fairly stated that in this application he is questioning the demand for payment of interest/penal interest towards income-tax. It is stated that payment of interest on wealth-tax, does not arise now in view of the stay granted by this court. Mr. M.K. Kabir, learned counsel appearing for the applicant after pointing out that the income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Chit Funds (P.) Ltd. v. ITO [1996] 219 ITR 498 to the effect that the Income-tax Department is a secured creditor, since the issue relates to waiver of interest/ penal interest, I am of the view that except stating that the Income-tax Department is treated as a secured creditor, no further discussion is required. Before going into various decisions cited by Mr. M.K. Kabir, learned counsel for the petitioner, it is also relevant to note that tax is due, and interest for the tax amount from the assessment year 1972-73 onwards. Section 156 of the Income-tax Act, 1961, speaks about notice of demand and section 220 speaks about when tax is payable and when the assessee is deemed in default. A Division Bench of this court in the case of S. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld that, if the court is satisfied on the facts of a particular case that the claim for statutory interest under the Income-tax Act, 1961, would amount to hardship, cause grave miscarriage of justice and injury to the contributories, the court has power under section 446(2)(b) of the Companies Act, 1956, to disallow the Department's claim for interest under section 220(2) on arrears of income-tax. After saying so, their Lordships rejected the claim of the income-tax authorities for the interest. In the case of ITO v. Official Liquidator [1986] 158 ITR 791 (Ker), the dispute related to the claim for interest under section 220(2) of the Income-tax Act. After analysing the provisions from the Companies Act and the Income-tax Act, the court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Income-tax Act held that, if the proceedings to be taken by the liquidator under section 178(3) of the Income-tax Act are taken out of the control and overall supervision of the company judge under section 446 of the Companies Act, then it would defeat the entire scheme of the Companies Act about the disbursement of the company's assets during the winding up proceedings. All the above decisions clearly show the power of the company court under section 446(2)(b) of the Companies Act, 1956, which overrides any other law more particularly section 220(2) of the Income-tax Act, 1961. The only restriction is that the court has to satisfy on the facts of a particular case that the claim for statutory interest under the Income-tax Act would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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