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TMI Blog1933 (11) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... the return that questions 1 to 3 would arise. The official liquidators if there be any difficulty, will be at liberty to approach the Hon'ble the Company Judge and obtain direction. When a return has been furnished, it will be for the Income Tax Officer to scrutinize it and to object to any item, if there be one to take exception to. We therefore proceed to decide point 4 on which alone we have been addressed by learned Counsel for the official liquidators and the legal adviser to the Income Tax authorities. The point for decision is: Whether under the Companies Act a liquidator is exempt from making an Income Tax return on business managed by him for the beneficial winding-up of the company ? 2. Just a few facts would be necessary t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to record our opinion. Under Section 3, Income Tax Act, 1922, every individual, Hindu undivided family, " company" firm and other association of individuals are liable to Income Tax. The argument on behalf of the official liquidators is that a company which has gone into liquidation is no longer a " company within the meaning of Section 3, Income Tax Act, and therefore no Income Tax can be assessed on the liquidators as representing the company. The word " company " is defined in Section 2(6), Income Tax Act as follows: 'Company' means a company as defined in the Indian Companies Act, 1913.... The Agra Spinning and Weaving Mills Co., Ltd., was therefore a company within the meaning of the Income Tax Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er was made the previous officers of the company ceased to hold office, and thus the former secretary, treasurer, manager or agent disappeared from the scene. But we find that the liquidators are actually managing the business of the company, and we may safely take it that the liquidators come under the word " manager " as used in Clause (a), Sub-section (12), Section 2. The word "manager" is defined in the Companies Act as follows: Manager includes any person occupying the position of a manager, by whatever name called and whether under a contract of service or not. 7. It will, therefore, be noticed that the word " manager" used in Section 2(12), Income Tax Act, has been used in a wide sense and is quite in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the liquidators are liable or not to make a return for the purpose of assessment of Income Tax. Again, when the interest is paid, say two or three years hence, they would be entitled to set off the interest actually paid against the income then earned. 8. The next argument is that under Clause (9), Sub-section (2). Section 10, a man doing business is entitled to set off against his income any expenditure incurred solely for the purpose of earning such profits or gains ; but in the case of official liquidators it cannot be said that the whole of the expenditure in liquidation has been spent for the purpose of earning such profits or gains. This may be true. What the liquidators have to do is only to apportion a fair amount of the expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies in "liquidation which were earning profits in the course of liquidation. There could not have been an intention on the part of the legislature to exempt such companies from taxation. If we are not allowed to read the word "company" in Section 3 as including a company in liquidation, surely the official liquidators would come under the word "manager" used in Section 41, Income Tax Act. The word "manager," it is stated in Section 41 itself, includes any person, whatever his designation, who in fact manages property on behalf of another. Within this definition the liquidators must come. Our view is that a company in liquidation is included in the word "company" in Section 3, and it is not ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ways laid down in law against the property of the company in liquidation, but Section 171 would stand in their way of taking any proceedings against the company's property. Two answers can be-given to this argument. The first is that where a tax is justly and legally leviable, there would be no difficulty in obtaining the leave of the Court to enforce payment of the tax. This would satisfy the requirements of Section 171, Companies Act. The second answer is that the right of the Crown to enforce payment of its dues cannot be taken away by a statute which does not expressly enact to that effect. By mere implication the Crown's right and remedy cannot be barred. This was held in the case of West Laikdih Coal Co., Ltd. The view taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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