TaxTMI 
TaxTMI 
TaxTMI 
2004 (7) TMI 22
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....positors, who invested their hard earned money with RPS Benefit Fund Limited, a financial company in liquidation. During the course of winding up proceedings of RPS Benefit Fund Limited in C.P. Nos. 233 to 238 of 1999, this court, by order dated July 20, 1999, appointed Mr. G. Masilamani, learned senior counsel as the chairman of the Inspecting Committee, assisted by his team of officers, who unearthed various misfeasance and malfeasance relating to the siphoning off the funds of RPS Benefit Fund Limited by P.G. Saranyan and his wife, Rajalakshmi, the appellants in the above appeals. The Investigating Committee found that the appellants herein have siphoned off the funds of RPS Benefit Fund Limited and floated another company, viz., Ajith....
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.... shares and some of the assets relating thereto shall be utilised exclusively for the payment to be made to the depositors of RPS Benefit Fund Limited, after the claims of such depositors are duly verified and found to be genuine. Simultaneously, the Economic Offences Wing, also initiated action against RPS Benefit Fund Limited under the provisions of the Criminal Law Amendment Ordinance, 1944, and by G.O.Ms. No. 995, Home (Courts IIA) Department, dated October 21, 2002, attached the properties which were acquired out of the pecuniary sources that were believed to be procured from and out of the deposits collected from the depositors. Concededly, Ajith Dairy Industries Ltd. itself was got floated and incorporated by siphoning off the fund....
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....-tax Act to recover tax from the appellants towards capital gain, out of the funds available with the official liquidator as referred to above. On receipt of the said notice under section 222 of the Income-tax Act, the appellants herein, viz., Rajalakshmi filed Application No. 1443 of 2002 and Saranyan filed C.A. No. 1444 of 2002 and C.A. No. 1445 of 2002, seeking the relief as follows: (a) in C.A. No. 1443 of 2002, to direct the third respondent therein to adjust the sum of Rs. 1,03,469 paid by him towards the income-tax on her behalf from the arrears of lease rentals payable by the third respondent for the months of February 2000 to November 2000 amounting to Rs. 1,50,000 for the land on which M/s. Ajith Dairy Factory is situate; (b) i....
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....d capital gains tax payable by the appellants herein shall be paid out of the sale proceeds of the shares lying in credit with the liquidator to the Income-tax Department on preferential basis, as per section 530(1)(a) of the Companies Act, referred to above. But the administrator appointed by this court in the matters of RPS Benefit Fund Limited, objected to the same contending that section 530(1)(a) of the Companies Act is not attracted in the instant case, in view of the fact that Ajith Dairy Industries Ltd. got floated by siphoning off the funds of RPS Benefit Fund Limited, which were invested by the innocent depositors, whose interests are well protected by the order of this court dated September 29, 2000 and March 25, 2004, which wer....
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....tigating Committee to investigate into the affairs and diversification of the funds of RPS Benefit Fund Limited, and who is appearing as amicus curiae in the matter, invited our attention to the orders of this court dated September 29, 2000 and March 25, 2004, wherein it is held that the funds available with the official liquidator are meant for repayment of funds to the innocent depositors and the same cannot be diverted for any other purpose and in any event, section 530 of the Companies Act is not attracted to the facts of the instant case. We have bestowed our careful consideration to the submissions of all sides. It is not in dispute that the properties of RPS Benefit Fund Limited got attached by G.O.Ms. No. 995, Home (Courts IIA) De....
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....nding up of RPS Benefit Fund Limited, but it is the sale consideration of 81 per cent, of shares of the appellants in Ajith Dairy Industries Ltd. and, therefore, section 530 of the Companies Act is not attracted in the instant case. Assuming the income-tax authorities are at liberty to recover the capital gains tax, they are at liberty to initiate appropriate action against the appellants herein in accordance with law against the properties already attached as referred to above. But, in any event, we are convinced that the funds lying with the official liquidator are meant for the purpose of repayment to the innocent depositors and, therefore, the same cannot be made available to the income-tax authorities towards any liability of the appe....