Law:

Section:

JUDGMENT As almost all the details of work in connection with the winding-up of the affairs of this company had been concluded and there appeared to be available with the liquidator more than a lakh of rupees and requests were made on behalf of the petitioning-creditor and others that steps may be taken to declare a final dividend, I directed the liquidator to file a report giving particulars so that that I may give further directions for the above purpose. The liquidator filed a report stating that though there was with him a sum of Rs. 1147,483 in the account of this winding-up, it may not be possible to declare a dividend for the reason that large amounts would be required to pay the fees due to Central Government and also that the auditors had suggested that there was also a tax liability in respect of income arising out of the investments made in the course of winding up. As the liquidator appeared to entertain the opinion that it was a matter for doubt whether the company in liquidation could be held to be liable to tax in the light of the recent amendments of the Income-tax Act and the Companies Act, I asked him to take out a formal application for directions. The above Application No. 16 of 1967 is such an application. So that I may have the benefit of the arguments from both the opposing points of view, I issued notice of the application to the Commissioner of Income-tax in Mysore and also permitted the official liquidator to engage the services of Mr. K. Srinivasan, Advocate. The Commissioner having entered appearance through counsel, his case was presented to me by Mr. Rajasekhara Murthy. In the course of this winding-up, large sums of money came into the hands of the liquidator which could not be immediately applied for distribution of dividends to the creditors. The result was that he had to invest the same pursuant to the relevant provisions of the Companies (Court) Rules. They were mostly by way of bank deposits. The following table gives the amounts of interest received from time to time ; Financial Year Amount of interest 1960-61 52,510.02 1961-62 52,589.04 1962-63 38,142.50 1963-64 33,105.67 1964-65 12,587.72 1965-66 6,429.10 Total Rs.…

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