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2016 (6) TMI 291 - HC - Income TaxGrant of waiver of interest and/or penalty - company in liquidation - whether for the purpose of grant the Official Assignee should approach only the Central Board of Direct Taxes or whether the Official Assignee can get appropriate orders under Section 7 of the Presidency Towns Insolvency Act, 1909 or not? - Held that:- If the ultimate payment to the Department actually depends upon the extent of funds available in the coffers of the Official Liquidator or the Official Assignee, it is unthinkable that the Official Assignee should be driven to the necessity of approaching the Authority for the waiver of the interest and to allow him to come up before the Insolvency Court in case he suffers an order. Hence, we are of the considered view that the question of waiver could also be considered by the Insolvency Court itself. In case where surplus funds are available, the Company Court distributes such surplus funds to the promoters. Similarly, the Insolvency Court distributes surplus funds to the insolvent or his or her legal heirs. But at that time, the Company Court can as well say that these surplus funds should be paid only towards discharge of the liability on account of interest and/or penalty. With that leverage in mind, we are of the considered view that this question of waiver can be decided by the Insolvency Court itself without driving the Official Assignee to go before the Central Board of Direct Taxes depending upon the amounts of funds available with the Official Assignee. As a matter of fact, in the case on hand, the insolvent herself took out an application before the Insolvency Court for a direction to the Official Assignee to set apart capital gains tax. By an order passed by one us (VRSJ) on 28.4.2011, the Official Assignee was directed to set apart 20% of the sale proceeds. Hence, Section 178(4) has been complied with by the Official Assignee and that is the end of Section 178 and nothing more. Thus the original side appeals are allowed, the order of the learned Judge is modified to the effect that the Official Assignee need not go before the Central Board of Direct Taxes praying for waiver of interest. The Insolvency Court itself can consider the question of waiver of interest in terms of the power conferred under Section 7 and in the light of the provisions of the Income Tax Act, together with the quantum of funds available and the distribution already made
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