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2014 (5) TMI 706 - HC - Income TaxInvocation of section 179 of the Act - Liability of the directors of private company in liquidation – Held that:- The dues were paid to the creditors at the time when assessment order was yet to be passed - The assessee made a bona fide claim of set off - It may be that according to the AO such claim was not maintainable - The issue has not yet achieved finality and is pending before the appellate authority - There is nothing on record to suggest that the company raised such a claim wholly mala fide - the ground that while paying all other creditors, the company made no provision for income tax liability, was not a valid ground - on the date when the creditors were paid off, there was no outstanding liability towards the income tax department. During the devastating earthquake of 26.01.2001, the hotel building was severely damaged - The ground that the directors should have taken appropriate measures to protect the property of the company is neither maintainable in law nor in fact - The company had insured its property - It was not a case where the directors failed to take measures for protecting the property or interest of the company as suggested by the Tax Recovery Officer - by itself it didn’t mean that the directors were negligent in performing their duties or they committed breach of duty in affairs of the company. The ground being deliberately false claim raised by the company is not borne out from any material on record - if the company raises a completely bogus and mala fide claim of tax deduction, with the sole purpose of defrauding the Revenue, it may still be open for the Revenue to argue that provisions of section 179 of the Act would be applicable – thus, the order of the Tribunal is set aside – Decided in favour of Assessee.
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