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TMI Blog2002 (10) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-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 amount to hardship, cause grave miscarriage and injury to the contributories. - am of the firm view that this is a fit and proper case where the claim of the income-tax authorities for interest/penal interest should not be allowed, as this court has ample power to waive under section 446(2)(b) of the Companies Act, 1956, read with rule 9 of the Companies (Court) Rules, 1959. - In the light of what is stated above, the official liquidator is permitted to remit the admitted liability of Rs. 6,94,122 excluding the demand for interest and penal interest. It is made clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt claimed is Rs. 13,83,209. The official liquidator in his report dated March 16, 1999, has stated that he has paid a sum of Rs. 54,90,147 towards the tax. It is further stated that when the wealth-tax demand is stayed by this court, the demand for interest is ill founded. Further, the demand for wealth-tax has been stayed and the income-tax demands are being contested, therefore, the company is not liable to pay any interest. Even the demands for property tax are subject to approval by this court. The amount claimed towards property tax for the Anna Salai property is Rs. 12,94,403 calculated at the annual rental value of Rs. 75,686. For the property at Puzhal, the amount due for the periods 1/1987-88 to 1/1992-93 is Rs. 79,193 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... component or the disputed liability has arisen due to no fault of the company. There is no dispute that the company is under liquidation, and the entire assets are under custodia legis. He further argued that the official liquidator has reasons to contest the demand or not admit the claims, it will not give rise for the creditors to demand payment of interest or penal interest. In other words, according to him, the demand for payment of interest/penal interest is not justifiable and is liable to be waived. Now, I shall consider whether this court has power to waive interest and the demand for payment of interest/penal interest is justifiable or liable to be waived as claimed? Before considering the said aspect, it is my duty to point ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingle judge at the rate of 12 per cent. was contrary to rule 156 of the Companies (Court) Rules, 1959, which puts a ceiling of 4 per cent. on the rate of interest payable on debts by the company. In the case of Official Liquidator, High Court, Calcutta v. ITO, "K" Ward, Companies District-III [1981] 130 ITR 790 (Cal), a learned single judge after referring to the provisions of the Companies Act, 1956, particularly in the winding up of a company and the Income-tax Act, 1961, has held that the power of the court (in the winding up of a company) under section 446(2)(b) of the Companies Act, 1956, overrides any other law particularly section 220(2) of the Income-tax Act, 1961. If the court is satisfied on the facts of a particular case that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be said that he is a defaulter who is to be visited with the liability to pay interest under section 220 or even the penalty under section 221." They further held that, section 220 of the Income-tax Act cannot apply to a company in liquidation, which is governed by the provisions of the Companies Act. In the case of S.V. Kondaskar, Official Liquidator and Liquidator of the Colaba Land and Mills Co. Ltd. v. V.M. Deshpande, ITO, Companies Circle I(8), Bombay [1972] 83 ITR 685 (SC), the Constitution Bench of the Supreme Court has held that the liquidation court would have full power to scrutinise the claim of the Revenue after income-tax has been determined and its payment demanded from the liquidator. They further held that it would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e particulars furnished by the applicant in the form of an affidavit. Paragraph 6 of the affidavit refers to actual/admitted due under income-tax and interest claimed for the tax liability. It is not clear whether payment of tax was delayed by the official liquidator or the claim was not made by the Income-tax Department then and there. It is also to be noted that various proceedings were taken and as a matter of fact, certain matters are pending before the Tribunal/court questioning the tax liability, interest, penal interest, etc. I am satisfied that the interest component or the disputed liability has arisen due to no fault of the company. I am satisfied in the facts and circumstances of the case that the claim for interest/penal interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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