urgent : personal liability of director

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tarin shah (Querist)
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03 July 2008 Hi,

mr A is director of XYZ pvt. ltd.co. and the company has liability to pay (1) income tax or (2)excise liabilty then whether the mr.A can be made liable to pay the liability through its personal assets..
please suggest the answer with support of case...
what if the XYZ is public ltd. co.. whether the answer be the same..
please reply as soon a possible, its too urgent

regards,

TARIN

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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03 July 2008 No. Not under ordinary circumstances.

Late CA Sampat Jain

Late CA Sampat Jain (Expert)
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03 July 2008 PROVISION OF INCOME TAX ACT:

M.—Private companies]

Liability of directors of private company in liquidation.

179. [(1)] Notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), [where any tax due from a private company in respect of any income of any previous year or from any other company in respect of any income of any previous year during which such other company was a private company] cannot be recovered, then, every person who was a director of the private company at any time during the relevant previous year shall be jointly and severally liable for the payment of such tax unless he proves that the non-recovery cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company.

[(2) Where a private company is converted into a public company and the tax assessed in respect of any income of any previous year during which such company was a private company cannot be recovered, then, nothing contained in sub-section (1) shall apply to any person who was a director of such private company in relation to any tax due in respect of any income of such private company assessable for any assessment year commencing before the 1st day of April, 1962.]

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