TMI Blog1989 (8) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... 41(5) of the Income-tax Act; 1961 ?" The assessment year involved is the assessment year 1976-77, for which the relevant accounting year is the financial year ended March 31, 1976. The facts as narrated by the Tribunal in the statement of case are as under : The assessee-company had gone into voluntary liquidation pursuant to the special resolution of the assessee-company at the annual general meeting of the shareholders of the said company held on September 30, 1966. By that resolution, it was decided, that the assessee-company be wound up voluntarily as a members' voluntary winding-up. By another resolution, A. G. M. Twining, A. B. Bhattacharya and L. H. Das, all of Calcutta, were appointed liquidators of the assessee-company for the purpose of winding up its affairs and distributing its assets with joint and several powers detailed therein including the authority to them to act jointly or severally and to exercise all or any of the powers enumerated in clauses (a) to (d) of sub-section (1) of section 457 of the Companies Act, 1956. Therefore, for the year under consideration, the liquidator, Shri A. B. Bhattacharya, for himself and the other liquidators filed the return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (11) Bank charges 12.00 -------------------- 92,565.00 -------------------- The Income-tax Officer went through the details of the said expenses and he was of the opinion that all the said items of expenses could not be said to have been wholly and exclusively laid out for the purpose of earning the interest income. According to him, the expenses detailed below totalling Rs. 36,987 can be said to have been laid out wholly and exclusively for the purpose of earning the said income and he, accordingly, allowed the same for deduction under section 57(iii) of the Act Rs. P. Salary 32,858.00 Audit fees 1,000.00 General charges 962.00 Printing and stationery 2,155.00 Bank charges 12.00 ------------------- 36,987.00 ------------------- The view of the Income-tax Officer has been upheld by the Appellate Assistant Commissioner, 'A' Range, Calcutta. The factual position in the present case is similar to that in the case of Upper Ganges Valley Electricity Supply Co. Ltd. (In voluntary liquidation) [Income-tax Appeal No. 4332/(Cal) of 1977-78, dated February 5, 1979] to which one of us (judicial Member) was party. The arguments canvassed before us were the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome of a company (in liquidation) is to be verified and signed. There is, however, a residuary provision in sub-clause (f) of section 140 by which it has been provided that the return may be signed and verified in the case of any other person, by that person or some person competent to act on his behalf. The case of a company (in liquidation) has not been specifically provided for in any of the sub-clauses (a) to (e) of the Act. The residuary clause can be invoked in a case like this. Moreover, under section 457(2) of the Companies Act, 1956, the liquidator has been empowered "to do all acts and to execute, in the name and on behalf of the company, all deeds, receipts and other documents and for that purpose to use, when necessary, the company's seal". There is no reason why the liquidator cannot, in the name and on behalf of the company in liquidation sign and verify a return of income. The liquidator is competent to do all acts and execute all documents in the name and on behalf of the company and as such may sign and verify a return of income on behalf of the company in liquidation in terms of section 140(f) of the Act. The position has been made abundantly clear by the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. (5) Where there are more liquidators than one, the obligations and liabilities attached to the liquidator under this section shall attach to all the liquidators jointly and severally. (6) The provisions of this section shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force". Therefore, the liability of the liquidator for payment of income-tax of a company has been specifically provided for in section 178. The liquidator has to notify the Income-tax Officer within 30 days after his appointment as liquidator ; the Income-tax Officer has to give notice to the liquidator for the purpose of recovery of any income-tax payable by the company; the liquidator cannot part with any assets of the company without the leave of the Commissioner ; when the taxes are due from the company, if the liquidator fails to give notice under sub-section (1) of section 178 or parts with any asset of the company, then he will be personally liable to pay the taxes which were the legal obligation of the company to pay. This being the legal obligation of the liquidator, I fail to see why the liquidator cannot file the return of income and how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thout obtaining any leave of the court. The official liquidator challenged this notice. It was held by the court that the notice was properly issued. If the Income-tax Officer can properly serve a notice under section 148 upon the official liquidator calling upon him to file a return of income, then we fail to see why the official liquidator cannot file a return in accordance with law. It is to be noted that the official liquidator was called upon by the Income-tax Officer by serving notice under section 148 to file a return of income. In the case of Official Liquidator, Mysore Spun Silk Mills Ltd. v. CIT [1971] 79 ITR 399 (Mys), it was held by a Division Bench that, even after a winding-up order was passed, the company continued to be a "person" within the meaning of section 4 of the Income-tax Act, 1961, and, there fore, any receipt of income in the course of the winding-up which would attract liability to income-tax under its appropriate provisions would be liable to income-tax. It was further held that a company judge had the power to require the liquidator to file returns before the Income-tax Officer and the legal position of the liquidator, whether be was a liquidator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tribunal in an earlier case of Upper Jamuna Valley Electricity Supply Co. Ltd. in Income-tax Appeal No. 760/(Cal) of 1977-78, the deductions claimed had to be allowed only to the extent they were wholly and exclusively incurred for making and earning that particular income. The Tribunal observed that : " In the absence of any argument regarding the quantum of allowance, we do not propose to consider that question." There the quantum of allowance was not in dispute before the Tribunal. What was the exact amount spent wholly and exclusively for earning the income is basically a question of fact. , An argument on the basis of the doctrine of real income was sought to be made out. I am unable to see how that doctrine can be invoked in the facts of this case. It is not the case of the assessee that the assessee did not receive any income in this year nor is it the case of the assessee that there has been no accrual of income. The expenditures which are specifically allowable have to be allowed under the provisions of the Act. There is no general principle on the basis of which the expenditures claimed as deductible can be allowed as deduction. It is true that income-tax is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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