9911796707
TMI Blog1985 (4) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... owing permissible deduction to the extent only of Rs. 7,500 for each year as against the claim of the official liquidator for much larger deductions. In appeal by the official liquidator, the AAC allowed the deductions claimed and the taxable income of the company in liquidation was reduced considerably. In further appeal, at the instance of the Department, the Income-tax Appellate Tribunal set aside the orders of the AAC and allowed deduction to the extent of Rs. 10,000 for each year. Fresh demands were made by the ITO for payment of the tax assessed in pursuance of the orders of the Tribunal and the entire tax demanded was paid by the official liquidator on April 27, 1981. Thereafter fresh notices were issued under s. 154 of the I.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpose." Interest accrues under sub-s. (2) of s. 220 of the I.T. Act on failure of the assessee to pay the tax demanded within the time specified in the notice of demand. In Union of India v. India Fisheries (P.) Ltd. [1965] 57 ITR 331, the Supreme Court held that once the claim of the Income-tax Department has to be proved and is proved in liquidation proceedings, it cannot, by exercising its rights under s. 49E of the Indian I.T. Act, 1922, get priority over the other unsecured creditors. It was further held that s. 49E of the Indian I.T. Act of 1922 is a general provision applicable to all assessees in all circumstances while ss. 228 and 229 of the Companies Act of 1913 are special provisions dealing with proof of debts and their paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Shiromani Sugar Mills Ltd.'s case [1946] 14 ITR 248 (FC) and Ranganathan's case [1955] 2 SCR 374; 25 Comp Cas 344 (SC), the Supreme Court in Kondaskar v. Deshpande [1972] 83 ITR 685 stated thus at page 693 : "These two decisions in our opinion do not lay down that assessment proceedings under the Income-tax Act should be held to be within the contemplation of section 171 of the Indian Companies Act, 1913. " In the aforesaid decision of the Supreme Court in [1972] 83 ITR 685, it is held that the expressions " other legal proceeding " in sub-s. (1) and " legal proceeding " in sub-s. (2) of s. 446 of the Companies Act convey the same meaning and proceedings under both the sub-sections must be such as can appropriately be dealt with by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sri Desai is that the winding up court is empowered in its discretion to decline to transfer the assessment proceedings in a given case but the power on the plain language of of section 446 of the Act must be held to vest in that court to be exercised only if considered expedient. We are not impressed by this argument. The language of section 446 must be so construed as to eliminate such startling consequences as investing the winding-up court with the powers of an Income-tax Officer conferred on him by the Income-tax Act, because, in our view, the legislature could not have intended such a result. " The decision of the Punjab High Court in Union of India v. Seth Spinning Mills Ltd. (in liquidation) [1962] 46 ITR 193, wherein it was held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sore Spun Silk Mills Ltd. (In liquidation) [1968] 68 ITR 295 (Mys), 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. " In ITO v. Official Liquidator, Swaraj Motors (P) Ltd. (In liquidation) [1982] 134 ITR 132 (Ker), a Division Bench of this court, affirming the decision of a learned single judge, held that the assessment of interest under s. 220(2) of the I.T. Act is a legal proceeding within the meaning of s. 446 of the Companies Act and the sanction of the winding-up court is necessary before the interest payable is assessed. The Division Bench, referring to the decision in Kondaskar's case [1972] 83 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if so to what extent such payments can be made are all matters for the winding up court to decide when a claim is made by the Income-tax Department under ss. 528 and 529 of the Companies Act. The proceedings for recovery will, however, be hit by the provisions of s. 446(1) of the Companies Act, unless leave of the winding-up court is sought for and obtained prior to the commencement of the recovery proceedings. It is brought to our notice that subsequent to the decision of the learned single judge, the refund due to the company by way of excess tax paid for the years 1981-82 and 1982-83 was adjusted towards the interest assessed under s. 220(2) of the Act for the assessment years 1975-76 and 1976-77. The recovery effected by way of adj ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
