Enforceable tax claim in liquidation survives limitation, but statutory payment direction does not create preferential tax debt.

A statutory notice under section 46(5A) created an enforceable claim in liquidation where the company had acknowledged the liability before the limitation period expired, so the debt was not time-barred and could be proved against the company. Preferential status, however, was confined to the company's own tax dues to the Central Government; a claim arising from a direction to pay money due to another assessee did not qualify as a preferential tax debt. The claim was therefore admitted only as an ordinary unsecured debt, and preferential payment was refused.

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Issues: (i) Whether the amount claimed by the Income-tax Officer under section 46(5A) of the Indian Income-tax Act was still an enforceable debt and not barred by limitation when the company went into liquidation. (ii) Whether the department was entitled to preferential payment of that amount in the winding up.

Issue (i): Whether the amount claimed by the Income-tax Officer under section 46(5A) of the Indian Income-tax Act was still an enforceable debt and not barred by limitation when the company went into liquidation.

Analysis: The company's books and correspondence showed recognition of the liability to the builders for the quantified amount. The letter written before expiry of the ordinary limitation period amounted to an acknowledgment of liability, and the statutory notice under section 46(5A) created an enforceable claim against the company in favour of the Revenue. In the liquidation context, the department was entitled to prove the debt, and the claim could not be treated as time-barred on the date of the winding-up petition.

Conclusion: The claim was enforceable and was not barred by limitation.

Issue (ii): Whether the department was entitled to preferential payment of that amount in the winding up.

Analysis: Preferential status under the winding-up provisions is confined to tax dues owed by the company itself to the Central Government. A claim arising from a statutory direction to pay over money due to another assessee does not become the company's own tax liability. At the highest, the department stands in the position of an ordinary creditor for that amount.

Conclusion: Preferential payment was not admissible, and the claim ranked only as an ordinary debt.

Final Conclusion: The rejection of the claim in its entirety was set aside in part, the monetary claim was admitted as an ordinary unsecured debt, and the request for preferential payment failed.

Ratio Decidendi: A statutory notice requiring a debtor to pay money due to a tax defaulter can create an enforceable claim in liquidation, but it does not convert that claim into a preferential tax debt payable ahead of ordinary creditors.

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