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High Court rules tax liabilities of company should not be enforced against personal assets of directors. The High Court of Allahabad ruled in favor of the petitioner, a director of a private limited company, in a case concerning the recovery of tax arrears ...
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
High Court rules tax liabilities of company should not be enforced against personal assets of directors.
The High Court of Allahabad ruled in favor of the petitioner, a director of a private limited company, in a case concerning the recovery of tax arrears from personal assets. The Court quashed a Circular allowing such recovery, citing precedents that tax liabilities of a company should not be enforced against the personal assets of directors. The Court directed that tax arrears and outstanding dues should not be recovered from the petitioner's personal assets but could be recovered from the company's assets or property and from directors possessing the company's assets.
Petitioner, a director of M/s Bhagirathi Iron & Steel Pvt. Ltd., challenged Circular dated 15.09.1998 directing recovery of company tax arrears from directors' personal assets. Central question: whether arrears and liabilities of a private limited company can be recovered from a director's personal assets. Reliance was placed on precedent holding that "recovery cannot be made from the personal assets of the Directors." That view had been followed in subsequent authority and had resulted in quashing of the 15.09.1998 Circular in related proceedings. Court directed that respondents shall not recover the company's arrears or outstanding dues from the petitioner's personal assets. The respondents remain entitled to recover trade-tax arrears from (a) assets/property of M/s Bhagirathi Iron & Steel Pvt. Ltd., and (b) directors who are in possession of the assets of the company.
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