BRAUND, J. - (1.) -
(2.) THIS is an application under the Indian Companies Act, 1913, made in the winding-up of the Shiromani Sugar Mills, Ltd., in liquidation. The Company prior to its winding-up carried on business as the proprietors of Sugar Mills at Khalilabad in the Basti District of the United Provinces. In the course of its business the company is said to have made profits amounting to Rs. 66,407 in the year ending 30th May, 1941, in respect of which it was assessed to income-tax for the year of assessment 1941-42 in the sum of Rs. 18,493-12-0. This assessment was not however, actually made by the Income-tax Office until 25th February, 1943, by which time an order for the compulsory winding-up of the Company had been made on the petition of a debenture holder. The date of the presentation of the petition for winding-up was 26th November, 1941. On 7th April, 1942, the winding-up order was made by this Court. The position, therefore, was that the assessment was actually made by the Income-tax Officer after the date of the winding-up order, but was in respect of the winding-up order, but was in respect of the assessment year 1941-42, and was based on the profits of the year 190-41. The liquidators, having received the assessment, took the view that the proper course would be for the Income-tax Officer to prove in the liquidation for the tax claimed; and they so informed him. After some correspondence, the Income-tax Department intimated that they proposed to proceed under Section 46 of the Income-tax Act, and that they had issued a recovery certificate in respect of the amount of the assessment of 25th February, 1943, to the Collector of Allahabad for recovery of the tax in question under that section as if it were an arrear of land revenue.
(3.) THESE are the material facts which have led to the present application by the liquidators to the High Court in the winding up of the Company. In view of the many points raised. It is important to observe that the relief asked for before us by the liquidators is, in effect, only that the Income-tax Officer may be restrained under Section 169 of the Indian Companies Act, 1913, from proceeding with the recovery of the amount of the assessment through the machinery of section 46 of the Income-tax Act, and may in consequence be related to his right of proof in the winding-up for such amount (if any) as may be payable by the Company in respect of tax due. On the hearing of the application we have actually been invited to go a good deal further than this and, in effect, to determine the validity of the assessment itself in the sense of deciding whether the assessment or the full assessment, can be sustained by the Income-tax Officer. But that does not appear to us to arise at this stage. The only matter in issue before us on this present application is whether it is open to the Income-tax Officer to proceed with the recovery of the assessed amount under Section 46 of the Income-tax Act, notwithstanding the winding-up order and notwithstanding the provisions of the Indian Companies Act, 1913, regulating the distribution of the assets of the Company in a liquidation. If the rights of the Income-tax authorities under Section 46 of the Income-tax Act are unaffected by the scheme of distribution of assets in a liquidation contained in the Indian Companies Act, 1913, then cadit quaestio. If, on the other hand, the rights of the Income-tax authorities under that section are subordinated to the relevant winding-up provisions of the Indian Companies Act, 1913, then subject to the question whether the Court can, will, exercise its discretion under Section 171 of the Indian Companies Act, 1913, in favour of the Income-tax Officer so as to allow him to continue the recovery proceedings before the Collector, the Income-tax Department will necessary be thrown back on to its rights of proof in the liquidation. In our view, therefore, subject to a preliminary point as to jurisdiction, the only question at present before us is whether the Income-tax Department, without the leave of the winding-up Court, can continue the proceedings for summary collection of the tax claimed outside the winding-up; or whether, if they wish to recover the debt, they are bound to prove as creditors in the liquidation. Mr. Pathak, who has appeared on behalf of the Income-tax Department has, however, taken the point that this Court has no jurisdiction to entertain this question. This has been argued somewhat late in proceedings, but we shall do well to deal with it first, since it is a point which is in the nature of a demurrer and is, moreover, one both of difficulty and importance. It rests on Section 226 (1) of the Government of India Act, 1935, which provides that : Until otherwise provided by Act of the appropriate Legislature, no High Court shall have any original jurisdiction in any matter concerning the revenue, or concerning any act ordered or done in the collection thereof according to the usage and practice of the country or the law for the time being in force. ;