CL: Income-tax department does not have a preferential right in matter of payment of dues over right of secured creditors (including workmen) from proceeds received upon sale of mortgaged assets by Official Liquidator
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[2014] 49 taxmann.com 75 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax-II
v.
Official Liquidator of Gujarat Telephone Cables Ltd.
K.J. THAKER, J.
CO. APPLICATION NOS. 245 OF 2012, 525 OF 2008,
286,295 OF 2011 AND 208, 209 & 210 OF 2013
CO. PETITION NO. 253 OF 2008
OFFICIAL LIQUIDATOR REPORT NO. 35 OF 2012
JUNE 30, 2014
Section 326, read with section 327, of the Companies Act, 2013/ Section 529A, read with section 530 of the Companies Act, 1956 and section 178 of the Income-tax Act, 1961 - Winding up - Overriding preferential payments - Whether there is nothing in section 178 of Income-tax Act which, apart from asking liquidator to set aside assets sufficient to meet possible tax liabilities commands liquidator to pay tax dues in preference over all other dues and it does not place tax dues or dues of State/department in a position higher or better than what is conferred by and what is available under Companies Act - Held, yes - Whether order of priority in matter of payment is prescribed by virtue of section 529A, read with section 530 of Companies Act and not in Income-tax Act and obligation which is created under section 178 of Income-tax Act, does not override right of priority and preference created by and under section 529A of Companies Act - Held, yes - Whether when pursuant to sale of mortgaged assets Official Liquidator sought disbursement of sale proceeds to secured creditors and workmen covered within purview of section 529A but income-tax department after relevant date raised a demand for payment of tax dues in respect of gain received, question of restraining liquidator from discharging dues of secured creditors and workmen covered under section 529A would not arise and claim of department could not be sustained - Held, yes [Paras 16, 16.1 & 26]
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[2014] 49 taxmann.com 75 (Gujarat)
HIGH COURT OF GUJARAT
Commissioner of Income-tax-II
v.
Official Liquidator of Gujarat Telephone Cables Ltd.
K.J. THAKER, J.
CO. APPLICATION NOS. 245 OF 2012, 525 OF 2008,
286,295 OF 2011 AND 208, 209 & 210 OF 2013
CO. PETITION NO. 253 OF 2008
OFFICIAL LIQUIDATOR REPORT NO. 35 OF 2012
JUNE 30, 2014
Section 326, read with section 327, of the Companies Act, 2013/ Section 529A, read with section 530 of the Companies Act, 1956 and section 178 of the Income-tax Act, 1961 - Winding up - Overriding preferential payments - Whether there is nothing in section 178 of Income-tax Act which, apart from asking liquidator to set aside assets sufficient to meet possible tax liabilities commands liquidator to pay tax dues in preference over all other dues and it does not place tax dues or dues of State/department in a position higher or better than what is conferred by and what is available under Companies Act - Held, yes - Whether order of priority in matter of payment is prescribed by virtue of section 529A, read with section 530 of Companies Act and not in Income-tax Act and obligation which is created under section 178 of Income-tax Act, does not override right of priority and preference created by and under section 529A of Companies Act - Held, yes - Whether when pursuant to sale of mortgaged assets Official Liquidator sought disbursement of sale proceeds to secured creditors and workmen covered within purview of section 529A but income-tax department after relevant date raised a demand for payment of tax dues in respect of gain received, question of restraining liquidator from discharging dues of secured creditors and workmen covered under section 529A would not arise and claim of department could not be sustained - Held, yes [Paras 16, 16.1 & 26]
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