Prior court sanction for tax interest claims in liquidation is mandatory; levy unenforceable against the official liquidator.

Interest levied under section 220(2) of the Income-tax Act against a company in liquidation was held unenforceable because prior court sanction under section 446(2) of the Companies Act had not been obtained. As compliance with that mandatory requirement was absent, the levy could not be sustained against the official liquidator, and the demand notices were liable to be cancelled.

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Issues: Whether interest levied under section 220(2) of the Income-tax Act on a company in winding up was valid without prior sanction of the Court under section 446(2) of the Companies Act.

Analysis: The company was in liquidation and the demand for interest was raised without obtaining the Court's sanction. In the absence of compliance with the mandatory requirement under section 446(2) of the Companies Act, the levy of interest could not be sustained against the official liquidator.

Conclusion: The levy of interest was illegal and unenforceable against the official liquidator, and the demand notices were liable to be cancelled.

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