Law: Income Tax Ordinance, 1979

Section: 77,92

(a) Income Tax Ordinance (XXXI of 1979)---S.77---Government liabilities---Government liabilities arising subsequent to a charge on the properties cannot have preference over the claims of secured creditors. Federation of Pakistan v. Pioneer Bank Limited PLD 1958 Dacca 535; Income-tax Officer v. K.A. Govindaswamy (1978) 113 ITR 593 (Mad.); Sundaram Finance Limited v. The Regional Transport Authority (1979) 117 ITR 334 (Ker.) and Industrial Development Bank Limited v. M/s. Maida Limited and 3 others 1989 CLC 143 rel. (b) Income Tax Ordinance (XXXI of 1979)-- ----S.92---Recovery of income-tax from Director of Company---Power to manage affairs of a company generally vested in its Board of Directors and the same acted as a collective body and individual Directors could not be treated as being vested with powers of the Board---Where there was nothing to prove -that respondent/director had control or dominion over the moneys belonging to the company in his individual capacity such Director could not be made personally liable to nay such income-tax liability. Iftikhar Hussain Mamdot v. Ghulam Nabi Corporation PLD 1971 SC 550 rel. (c) Income Tax Ordinance (XXXI of 1979)--- ----S.77---Recovery of income-tax---Director of Company, liability of--¬Prior approval in writing from Income-tax Commissioner for recovery from Director of Company---Necessity---Where proceedings for recovery of tax dues of a private company from its directors or shareholders was to be initiated, the same could only be done after obtaining prior approval in writing from Income-tax Commissioner---No recovery could be effected from the Director of the Company in absence of any such approval. JUDGMENT SABIHUDDIN AHMED, J.---This appeal is directed against the order of the learned Single Judge, dated 9-8-1990 directing that an amount of Rs.370,882 recovered out of sale proceeds of property of respondent No.2 be paid to the respondent No.4 in satisfaction of income-tax liabilities of the respondent No. 1. 2. Briefly, the relevant facts appear to be that pursuant to and in consideration of loan/over draft facilities granted to respondent No. l Company (hereinafter referred to as the Company) by the…

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