1989 (12) TMI 3

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....f the Income-tax Act ? " The assessment year involved is the assessment year 1974-75 for which the relevant period of account is the year ending on May 30, 1973. The facts stated by the Tribunal are as under : The dispute in all these appeals related to the assessee's claim for deduction of remuneration to the custodian and other administrative expenses incurred by it against its income from other sources. The assessee is a limited company and was engaged in the manufacture and production of various engineering equipment of national importance. It went into bad ways and, therefore, the Government of India decided to acquire its undertaking by the Richardson and Cruddas Limited (Acquisition and Transfer of Undertaking) Act, 1972, th....

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....he provisions of the Act. The appointing authority is the Central Government. The custodian has no option but to keep the sum of Rs. 30 lakhs in a scheduled bank till the final stage comes. The custodian has to discharge several functions under the Act. The custodian has to maintain an administrative office and discharge other statutory functions under the Companies Act as well as under the Act for which he has to meet several expenses. The custodian holds the funds of the assessee in trust. In other words, he acts as a trustee, the beneficiary being the assessee-company. Whatever amount the custodian is left with is on the beneficiary's account. The custodian no doubt is in receipt of interest income. But, before he can part with the incom....

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.... can be allowed. " We are of the view that the Tribunal has taken a correct view of the matter. The custodian was appointed by the Central Government under the provisions of the Richardson and Cruddas Ltd. (Acquisition and Transfer of Undertaking) Act, 1972. Under that Act, the undertaking of the old company vested in the Central Government on the appointed day. The custodian was appointed under section 10 of the Act to manage the old company. The Act lays down the duties of the custodian. According to Chapter III of the Act, the custodian has to reconstruct a register of members of the old company, the custodian has to issue fresh share certificates, the custodian has the power not to hold the annual general meeting until reconstruction....