In Re: Wandoor Jupiter Chits P. Ltd. (In Liquidation)

K. John Mathew, J.—For the proper winding up of Wandoor Jupiter Chits (P) Ltd. (in liquidation), the liquidator had to incur various expenses. He is incurring such expenses in respect of the work of other companies also. For the assessment year 1982-83, the liquidator filed a return of income showing a total income of Rs. 15,820. The only income is the interest earned on the funds invested in fixed deposits. The Income Tax Officer allowed only 10% of the interest receipts as deduction u/s 57(iii) of the Income Tax Act and completed the assessment on a total income of Rs. 89,250. Total interest earned amounted to Rs. 99,168. In appeal, the Commissioner of Income Tax (Appeals) granted substantial relief by his order dated October 31, 1984. In appeal by the Revenue, the Tribunal affirmed the decision of the Commissioner of Income Tax (Appeals).

For the years 1983-84 and 1984-85 also, the Assessing Officer allowed 10% of the interest income as expenses admissible. The liquidator filed an appeal. But since there was delay in filing the appeal, the appeal was dismissed. The liquidator has moved the Appellate Tribunal against the order of the Commissioner of Income Tax (Appeals).

For the years 1987-88 and 1988-89, the Assessing Officer allowed only 10% of the interest income as expenses admissible. In appeal, the Commissioner of Income Tax (Appeals) granted substantial relief. But the appeal preferred by the liquidator before the Appellate Tribunal is pending orders.

In connection with these Income Tax assessments, the liquidator had engaged the services of Shri R. Krishna Iyer, Chartered Accountant, Ernakulam, and had incurred expenses by way of fees, etc. Even though in the assessment year 1982-83, the Commissioner of Income Tax (Appeals) granted substantial benefits to the liquidator, in the subsequent assessment years, the Income Tax Officer did not proceed on the basis of those deductions and allowed only 10% of the interest income as expenses admissible. In order to get appropriate relief for the subsequent years, the liquidator unnecessarily incurred huge expenses. This is because the Income Tax authorities are treating each year''s assessment as a separate proceeding to which the orders of the superior authorities for the earlier years are not applicable.

The official liquidator attached to this court becomes the liquidator of a company u/s 449 of the Companies Act when this court orders winding up of that company. He is an officer subject to the control of this, court. His major income is the interest earned on investments made as provided under Rule 293 of the Companies (Court) Rules. The liquidator will have to comply with various orders passed by this court for realising the debts due to the company by filing cases, engaging counsel and also by deputing staff for conducting enquiries. He has also to obtain legal assistance and appoint additional staff as provided under Rules 307 and 308 of the Companies (Court) Rules. He will have to incur expenses like cost of revenue stamp, cost of court fee stamp, audit fee, filing fee, Central Government commission, estate clerks'' salary, advocate''s fee, professional fee to chartered accountants, godown rent, printing charges, advertisement charges, travelling allowance, bank commission, witness batta, estate establishment expenses, remuneration paid to watchman and other miscellaneous expenses. The nature of these expenses is uniform in the administration of the winding up of all companies under his charge. All these expenses are met by the official liquidator as per the orders of this court.

Since the liquidator is incurring unnecessary expenditure for getting this fact admitted by the Income Tax authorities, it has become necessary for this court to give a declaration to the effect that these expenses are expenses in the winding up administration of the company.

Under these circumstances, it is declared that all the expenses incurred by the liquidator in respect of Wandoor Jupiter Chits (Pvt.) Ltd. (in liquidation) (this report is treated as a report in respect of that company alone), viz., cost of revenue stamps, cost of court fee stamps, audit fee, filing fee, Central Government commission, estate clerks'' salary, advocate fee, professional fee to chartered accountant, godown rent, printing charges, advertisement charges, travelling allowance, bank commission, witness batta, estate establishment expenses, remuneration paid to watchmen and other miscellaneous expenses which the liquidator is incurring as per orders of this court are allowable expenses in the winding up administration of the company (in liquidation).

If necessary, the liquidator may file separate reports in respect of each company and obtain separate orders in respect of each company.