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TMI Blog1979 (2) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... he first upto 15th Sept., 1973 and thereafter from 16th Sept., 1973. The assessee had made provisions for various payments and the ITO considering the results for the year as a whole held that retrenchment compensation was an admissible deduction. 3. The Commissioner, on scrutiny of the records, was of the view that retrenchment compensation paid of Rs. 1,06,044 was not an admissible deduction since it was not incurred for the purposes of business. For coming to this conclusion, the Commissioner has referred to the notice calling for an extraordinary general meeting of the company to be held on 15th Sept., 1973. This notice is referred to specifically in paragraph 5 of the Commissioner's order. The explanatory note to the notice has also b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in Liquidator, Delta Plantation Co. Ltd. vs. State of Madras (2) and submitted that the business carried on by the Liquidator was the normal trading activity of the assessee, namely, sale of comptometers and other articles and rendering of servicing facilities and the sales could not be considered as realisation sales. In any event, he submitted that even if it is considered that the business was in the course of winding up, since the business was being carried on, the expenditure in the matter of compensation was incurred to see that the maximum return could be obtained from the business carried on by the Liquidator. He therefore, pleaded for the entire amount being allowed as a deduction. 5. The learned Departmental Represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .N. Ganesan, Sri. P.G. Srinarayan, Sri P.G. Srinivasan and Sri P.G. Krishnamurthy be appointed as Joint Liqudators with power to act jointly or severally under s. 490 of the said Act. Accordingly, the said Liquidators have taken charge of the affairs of the Company with immediate effect. Under s. 487 of the said Act, the Company has to cease to carry on its business except so far as may be required for the beneficial winding up of such business. Notice is, therefore, hereby given that the employees will be retrenched from the service of the Company at any time commencing one month from the date of receipt of this notice by you and not later than the date of completion of the winding up proceedings and dissolution of the Company in strict c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stopping of the manufacturing programme of Simplex and Duplex Comptometers so much of spares of such machinery may not be required for servicing of and repairing such machines with the various customers, which now are only 401. The company will definitely be saddled with a dead stock to the extent of Rs. 2 lakhs worth of spares. Further, comptometer machines which have been supplied to the various customers on hire (which hires from substantial part of the company's income) are very old and they are being returned by the hirer recently. Again, customers are having a general feeling that instead of paying huge hire charges it may be worthwhile to go in for the new electronic calculators which are being manufactured in India. So the prospect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ed. At pages 888 & 889; "Effect of voluntary winding up; A voluntary winding up does not put an end to the corporate existence of the company. The company exists it is dissolved. The powers of the Directors continue to the extent to which they are allowed by the Liquidator. A voluntary winding up does not operate as a stay of any existing proceedings or prevent the institution of new proceedings. The Liquidator is treated as a person in the position of an agent for the company, performing his duties in accordance with the provisions of the Act; KNOWLES vs. SCOTT (1891) 1Ch. 717; PULSFORD vs. DEVENISH, (1903) 3 Ch. 625. The passing of a resolution for voluntary winding up does not operate as notice of discharge of the employees of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : "The scope of the words "any disbursements or expenses not being money wholly and exclusively laid out or expended for the purpose of the trade, profession or vocation" came to be considered by the King's Bench in Commissioner of Inland Revenue vs. Anglo Brewing Co. Ltd. Interpreting those words, Rowlatt. J., who delivered the judgment of the bench, observed; "New I cannot conceive how, under those circumstances, there can be any evidence at all that the payments were made for the purpose of the trade because that must mean for the purpose of keeping the trade going, and of making it pay. There was not any such purpose at all. The purpose was to wind it up, and making payments was not a question any longer. I am bound to say that I shou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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