TMI Blog1971 (9) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-1971 - Judge(s) : C. S. P. SINGH., R. S. PATHAK. JUDGMENT The judgment of the court was delivered by PATHAK J.- Messrs. Vijay Laxmi Sugar Mills Ltd., a private limited company, was incorporated in 1946. Mathura Prasad and his two sons, Ladli Prasad and Radhey Lal, were its only shareholders. They were also directors of the company from its inception. On August 4, 1949, the memhers of the company passed a resolution for its winding-up. A similar resolution was passed by the creditors the next day. Two joint liquidators were appointed. Upon subsequent litigation in relation to the winding-up of the company, the High Court made an order dated November 8, 1949, directing the company to be wound up under the supervision of the court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and had deposited them with the bank, and this constituted the vocation of the assessee. For the purposes of section 28 of the Income-tax Act, 1961, it was said, the company must be held to be carrying on a vocation and, therefore, the expenditure incurred by it should be adjusted against its profits and gains earned during the year. The Tribunal dismissed the appeal. It held that as the activity of realising the assets and banking them in fixed deposits was in the course of winding-up, it was not in furtherance of the business activity carried on heretobefore by the company. The assessee could not be said to have carried on a business or profession within the meaning of section 28, and, therefore, the income from interest on fixed deposits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a limited sense, as being carried on. But, if all that the liquidator does is to realise the assets, there is no carrying on of the company's business. Upon the facts before us, it is clear that the liquidators did not carry on the business of the company during the relevant previous year. The company had been put into winding-up. Its principal object, according to its memorandum of association, was to acquire and take over the business undertaking of the Vijay Sugar Corporation Ltd. which was engaged in the manufacture of sugar. For the purpose of carrying on that business it was empowered to erect a sugar mill, manufacture sugar machinery parts, purchase or produce sugar beet, sugarcane and manufacture molasses, alcohol, etc., etc., a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have carried on the business of the company. But, here, after they had realised the assets they put them into fixed deposit. The activity on which they rely followed after realisation had been completed. For the purpose of realising the assets they did not carry on any business activity. We are unable to hold that the company carried on any business or vocation, and it seems to us that the Tribunal is right in holding that the case is not governed by section 28 but falls to be considered under section 56. The income from the fixed deposits has to be considered as income from "other sources", and only that expenditure can be deducted from it which under section 57 can be considered as incurred for earning that income. The Tribunal has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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