1972 (2) TMI 17

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....the assessment year 1972-73. The official liquidator has objected to the grant of leave on the grounds that the company is not obliged to pay income-tax on any income earned by it after the winding-up order and advance tax cannot be paid in preference to the other debts as it is not a preferential claim within the meaning of section 530 of the Companies Act, 1956, hereinafter referred to as "the Act". The arguments before me have, however, been advanced on the assumption that the company is liable to pay income-tax, as the official liquidator and the learned counsel for the interveners want to agitate the question of the liability to pay income-tax before the authorities concerned at the appropriate time. The only question which, therefore,....

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....Subject to the retention of such sums as may be necessary for the costs and expenses of the winding-up, the foregoing debts shall be discharged forthwith so far as the assets are sufficient to meet them, and in the case of the debts to which priority is given by clause (d) of sub-section (1), formal proof thereof shall not be required except in so far as may be otherwise prescribed. " As Maugham J. has stated in In re Beni Felkai Mining Co. the phrase "expenses of the liquidation" (or "expenses of the winding-up") is not a term of art, and there is no reason why it should not include any expenses which the liquidator "might be compelled to pay in respect of his acts in the course of a proper liquidation of the company's assets". The paym....

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....is likely thereafter to become payable by the company, it is not permissible for him to get over the omission or mistake by recourse to section 210 of the Income-tax Act. It has been argued that the special provision of section 178 should prevail over the general provision of section 210. The argument has been supported by a reference to Union of India v. India Fisheries (Private) Ltd. The argument is, however, untenable for the reason that sub-section (2) of section 178 cannot be said to refer to the amount of any income-tax which may be payable in a case where profits are earned by a company while carrying on its business for its beneficial winding-up within the meaning of section 457(1)(b) of the Act. Any other view of section 178(2) wil....