Preferential payment for tax arrears in winding up is limited to liabilities due and payable within the statutory twelve-month period.

Income-tax arrears were not entitled to preferential payment in winding up because section 530(1)(a) of the Companies Act, 1956 grants priority only to taxes that became due and payable within the twelve months immediately preceding the relevant winding-up date. A merely unpaid antecedent tax liability does not satisfy that requirement, so the claim was admissible only as an ordinary unsecured debt. Section 178 of the Income-tax Act, 1961 did not alter that result, as it was treated as dealing with a different subject and no notice had been issued to the official liquidator. The preferential payment claim was therefore rejected.

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Issues: Whether arrears of income-tax were entitled to preferential payment in the winding up of the company under section 530(1)(a) of the Companies Act, 1956, and whether section 178 of the Income-tax Act, 1961 affected that priority.

Analysis: The claim related to income-tax arrears that had become due and payable long before the period of twelve months immediately preceding the winding-up date. Section 530(1)(a) grants priority only to revenues, taxes, cesses and rates that are due from the company and have become due and payable within the stipulated twelve months before the relevant date. Mere non-payment during that period does not satisfy the statutory requirement. Section 178 of the Income-tax Act, 1961 was held to be irrelevant, as no notice had been issued to the official liquidator and the provision dealt with a different subject from the priority rule in section 530.

Conclusion: The claim was not entitled to preferential status under section 530(1)(a); it was admissible only as an ordinary unsecured debt. The request for preferential payment was rejected.

Final Conclusion: The income-tax claim was admitted in winding up, but without priority, and the company was not required to pay it as a preferential debt.

Ratio Decidendi: Priority under section 530(1)(a) is available only when the tax both becomes due and becomes payable within twelve months next before the relevant winding-up date; a merely unpaid antecedent tax debt does not qualify.

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