TMI Blog1933 (11) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial liquidators if there be any difficulty, will be at liberty to approach the Hon'ble the Company Judge and obtain direction. When a return has been furnished, it will be for the Income Tax Officer to scrutinize it and to object to any item, if there be one to take exception to. We therefore proceed to decide point 4 on which alone we have been addressed by learned Counsel for the official liquidators and the legal adviser to the Income Tax authorities. The point for decision is: Whether under the Companies Act a liquidator is exempt from making an Income Tax return on business managed by him for the beneficial winding-up of the company ? 2. Just a few facts would be necessary to be stated in order to lead up to the questions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1922, every individual, Hindu undivided family, company firm and other association of individuals are liable to Income Tax. The argument on behalf of the official liquidators is that a company which has gone into liquidation is no longer a company within the meaning of Section 3, Income Tax Act, and therefore no Income Tax can be assessed on the liquidators as representing the company. The word company is defined in Section 2(6), Income Tax Act as follows: 'Company' means a company as defined in the Indian Companies Act, 1913.... The Agra Spinning and Weaving Mills Co., Ltd., was therefore a company within the meaning of the Income Tax Act. A company once formed and registered would continue to be a company until it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, treasurer, manager or agent disappeared from the scene. But we find that the liquidators are actually managing the business of the company, and we may safely take it that the liquidators come under the word manager as used in Clause (a), Sub-section (12), Section 2. The word manager is defined in the Companies Act as follows: Manager includes any person occupying the position of a manager, by whatever name called and whether under a contract of service or not. 7. It will, therefore, be noticed that the word manager used in Section 2(12), Income Tax Act, has been used in a wide sense and is quite in keeping with the meaning assigned to it in the Companies Act. Further there is no difficulty in treating the official liquidat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs hence, they would be entitled to set off the interest actually paid against the income then earned. 8. The next argument is that under Clause (9), Sub-section (2). Section 10, a man doing business is entitled to set off against his income any expenditure incurred solely for the purpose of earning such profits or gains ; but in the case of official liquidators it cannot be said that the whole of the expenditure in liquidation has been spent for the purpose of earning such profits or gains. This may be true. What the liquidators have to do is only to apportion a fair amount of the expenditure incurred in the liquidation in order to have it set off against the income earned by the working of the mills. The next argument is that Section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to exempt such companies from taxation. If we are not allowed to read the word company in Section 3 as including a company in liquidation, surely the official liquidators would come under the word manager used in Section 41, Income Tax Act. The word manager, it is stated in Section 41 itself, includes any person, whatever his designation, who in fact manages property on behalf of another. Within this definition the liquidators must come. Our view is that a company in liquidation is included in the word company in Section 3, and it is not necessary to have recourse to Section 41 for the purpose of holding the liquidators liable. 9. It was argued that a company in liquidation would usually be an insolvent company and that may be o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be-given to this argument. The first is that where a tax is justly and legally leviable, there would be no difficulty in obtaining the leave of the Court to enforce payment of the tax. This would satisfy the requirements of Section 171, Companies Act. The second answer is that the right of the Crown to enforce payment of its dues cannot be taken away by a statute which does not expressly enact to that effect. By mere implication the Crown's right and remedy cannot be barred. This was held in the case of West Laikdih Coal Co., Ltd. The view taken there is supported by English decisions. We agree with that view. The result is that we see no difficulty in the way of the Income Tax authorities in calling upon the official liquidators to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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