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2014 (11) TMI 936 - HC - Income TaxRecovery of arrear of tax from third party - garnishee order - The contention of the petitioner is that the amount payable under the EMIs cannot be said to be the independent income of the 3rd respondent (assessee) - Held that:- The 3rd respondent, which was under obligation to pay the instalments of loan to the petitioner, has chosen to channelize that liability directly from the 2nd respondent. No exception can be taken to such an arrangement. The second important factor is that the 3rd respondent is under liquidation. The companies Act stipulates the priorities of the secured and unsecured creditors vis-a-vis the assets of a company, under liquidation. Whatever may have been the permissibility and legality of the arrangement between the petitioner and respondents 2 and 3, for direct payment of EMIs to the petitioner, the same cannot be continued once the liquidation proceedings are in progress. The petitioner on the one hand and the 1st respondent on the other hand shall be entitled to submit their claims before the official liquidator and he in turn shall make the payments out of the available sources to the petitioner and the 1st respondent in accordance with the priorities that are provided for under the Companies Act. This exercise shall be completed within a period of three months.
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