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TMI Blog1972 (2) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial liquidator has objected to the grant of leave on the grounds that the company is not obliged to pay income-tax on any income earned by it after the winding-up order and advance tax cannot be paid in preference to the other debts as it is not a preferential claim within the meaning of section 530 of the Companies Act, 1956, hereinafter referred to as "the Act". The arguments before me have, however, been advanced on the assumption that the company is liable to pay income-tax, as the official liquidator and the learned counsel for the interveners want to agitate the question of the liability to pay income-tax before the authorities concerned at the appropriate time. The only question which, therefore, remains for my consideration is wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be necessary for the costs and expenses of the winding-up, the foregoing debts shall be discharged forthwith so far as the assets are sufficient to meet them, and in the case of the debts to which priority is given by clause (d) of sub-section (1), formal proof thereof shall not be required except in so far as may be otherwise prescribed. " As Maugham J. has stated in In re Beni Felkai Mining Co. the phrase "expenses of the liquidation" (or "expenses of the winding-up") is not a term of art, and there is no reason why it should not include any expenses which the liquidator "might be compelled to pay in respect of his acts in the course of a proper liquidation of the company's assets". The payment of income-tax is, therefore, a part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, it is not permissible for him to get over the omission or mistake by recourse to section 210 of the Income-tax Act. It has been argued that the special provision of section 178 should prevail over the general provision of section 210. The argument has been supported by a reference to Union of India v. India Fisheries (Private) Ltd. The argument is, however, untenable for the reason that sub-section (2) of section 178 cannot be said to refer to the amount of any income-tax which may be payable in a case where profits are earned by a company while carrying on its business for its beneficial winding-up within the meaning of section 457(1)(b) of the Act. Any other view of section 178(2) will not be possible for the simple reason that the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence has been made already, for when the liability to pay the advance tax is there, there is no reason why the official liquidator should not be required to retain the amount payable therefor, under sub-section (6) of section 530, as a part of the expenses of the winding-up, to the exclusion of the claims for the discharge of even the preferential debts. Apart from the above arguments, it has been argued that leave should be refused to the applicant because there can be no question of non-payment of the income-tax in this case as the company is under the management and control of the court through the official liquidator. It has, therefore, been contended that it is not necessary to anticipate the total income of the company for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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