Law:

Section:

Section 293 of the Income-tax Act, 1961 - Bar of suits in civil courts -company went into voluntary liquidation as a solvent company - In course of liquidation liquidators sold certain assets on account of which ITO assessed capital gains in liquidators' hands - Liquidators' contentions against assessments were rejected up to Tribunal - ITO filed application before Company Court for realising demands due and payable by company and also for freezing bank accounts until its disposal - Company Court allowed ITO's application with direction to liquidators not to return any capital to contributories or any payment without leave of Court - Whether Company Court was competent to exercise power to scrutinise revenue's claim - Held, no - Whether liquidators could be directed to set apart certain sum to meet other creditors' claims and pay balance to revenue against its pending claim of income-tax -Held, yes Facts The assessee-company went into voluntary liquidation on 10-12-1970 as a solvent company. While most of the assets had been realised by the liquidators except a few claims remaining outstanding, the claims of the creditors had all been paid in full. 40 per cent of the capital were also returned to the contributories. Certain claims of the company against the State Railways and the Union of India were outstanding while some claim of the State Railways against the company was also due, to be set off against each other's claims. In course of liquidation the liquidators sold the assets of the company. The ITO assessed capital gains in the hands of the liquidators by reason of the sale of those assets. The contentions of the liquidators against the assessments made were all rejected up to the level of the Tribunal. The ITO filed the application before the Company Court for realising the demands due and payable by the company, and also for freezing: the bank accounts of the company until its disposal. The Company Court held, inter alia, that inasmuch as the assessments had been completed and `demand notices issued, the amount claimed should be allowed to be so recovered, particularly as no stay had been obtained by the liquidators. The liquidators were further…

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