Liquidator as Principal Officer: can be required to file income-tax returns for income arising during winding-up.

The official liquidator acting as the company's agent during compulsory winding-up qualifies as a principal officer under section 2(35) of the Income-tax Act, so the liquidator may be directed to prepare and file income-tax returns for income arising during the winding-up; the court reasoned that the company retains corporate existence, the liquidator administers company property and exercises powers of former officers for winding-up purposes, and the winding-up court must ensure the company's tax liabilities are met, consequently the appeal was dismissed.

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Issues: (i) Whether the official liquidator of a company in compulsory winding-up is a "principal officer" within the meaning of section 2(35) of the Income-tax Act, 1961 and therefore can be directed to prepare and file income-tax returns in respect of income arising during winding-up.

Analysis: Section 2(35) of the Income-tax Act, 1961 defines "principal officer" to include the secretary, treasurer, manager or agent of a company. During winding-up the company retains corporate existence and its affairs are administered for winding-up purposes. The liquidator acts as the company's representative and administers its property for purposes of winding-up, exercising powers formerly vested in directors and other officers; authorities and texts treat the liquidator as agent for winding-up purposes. The court conducting a compulsory winding-up must ensure that the company's liabilities, including liability to income-tax, are met and the liquidator, as the officer appointed to administer the winding-up under the Companies Act, 1956, performs those functions. Prior decisions have recognised that a liquidator may be treated as manager or as the subject of a notice treating him as principal officer; where the liquidator functions as the company's agent in winding-up, he falls within clause (a) of section 2(35).

Conclusion: The liquidator is a "principal officer" within the meaning of section 2(35)(a) of the Income-tax Act, 1961 and may be directed to prepare and file returns in respect of income arising during the winding-up. The appeal is dismissed.

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