A two-judge bench of the Supreme Court has held that an Income Tax Appeal would not become infructuous merely due to the reason that the Company’s name was struck down by the registrar of the Companies.
The High Court was of the view that since the respondent Company stands dissolved as a result of the order passed by the Registrar of the Companies under Section 560 (5) of the Companies Act, the appeal filed against such Company which stands dissolved does not survive for its consideration on merits.
Justice Abhay Manohar Sapre and Justice Dinesh Maheshwari said that “In our view, the High Court was wrong in dismissing the appeal as having rendered infructuous.”
According to the bench, the High Court failed to notice Section 506(5) proviso (a) of the Companies Act and further failed to notice Chapter XV of the Income Tax Act which deals with “liability in special cases” and its clause (L) which deals with “discontinuance of business or dissolution”.
“The aforementioned two provisions, namely, one under the Companies Act and the other under the Income Tax Act specifically deal with the cases of the Companies, whose name has been struck off under Section 506 (5) of the Companies Act,” the bench said.
These provisions provide as to how and in what manner the liability against such Company arising under the Companies Act and under the Income Tax Act is required to be dealt with.
“Since the High Court did not decide the appeal keeping in view the aforementioned two relevant provisions, the impugned order is not legally sustainable and has to be set aside,” the bench added.
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