1. These appeals by the First Income-tax Officer, Circle I, Coimbatore, are from an order of the Abolition Tribunal, Ramanathapuram at Madurai. It appears that AL. AK. RM. N. Arunachalam Chettiar and Diwan Bahadur Somasundaram Chettiar constituted a firm of partnership, which was assessed to income-tax for the assessment years 1951-52 to 1957-58 and that a sum of Rs. 1,40,200 or so was due as arrears of income-tax. On a notification under Section 3 of Madras Act, XXVI of 1948, the estate in which the two gentlemen were interested was taken over and the compensation in respect thereof stood deposited with the Tribunal. Claims were made under Section 42, which were dealt with and disposed of by the Tribunal. The First Income-tax Officer, Circle I, Coimbatore, applied to the Tribunal for payment out from the compensation a sum of Rs. 1,935.47 in all. But, the applications were disallowed on the ground that they were out of time.
2. We think that the Tribunal took the correct view. Section 42(1) of Madras Act XXVI of 1948 Madras Estates (Abolition and Conversion into Ryotwari) Act, 1948 (XXVI of 1948)provides that every person making a claim to, or enforceable against the compensation, should make an application for payment out within six months from the date on which the amount was deposited, or within such further time not exceeding six months as the Tribunal may in its discretion allow. Admittedly, the Income-tax Officer did not file the applications within the time or the extended time. The effect of Sub-section (2) of Section 42 so far as these appeals are concerned is that if the claim was not made within the time, it will cease to be enforceable.It is however argued for the appellant that the Crown's priority was a rule of common law and even after the country has become a Republic, the rule is in force. Our attention is invited to Union of India v. N.K.S.H. Marudappa Pandian, : 73ITR147(Mad) in support of this proposition. There it was held that the Union Government was entitled to claim priority for arrears of income-tax due to it from a citizen over debts due from him in preference to unsecured creditors. The further contention is that in view of Section 226(4) of the Income-tax Act, 1961, the Income-tax Officer was entitled to apply to the Tribunal and claim priority. We are unable to accept this contention. That section is applicable only to a court and the Tribunal constituted under Madras Act XXVI of 1948 is by no means a court. Apart from that, the common law principle can be invoked only where there is no statutory scheme of inhibition against it. But Madras Act XXVI of 1948 provides for the taking over of an estate and the effect of it is that it vests in the Government free from all encumbrances and liabilities. Having done that, the Act further provides for payment of compensation which is required to be deposited with the Tribunal and the Tribunal under Section 42(1) is directed to deal with claims to or claims enforceable against the compensation. For that purpose, the section prescribes a period of limitation for applications making claims to or enforceable against the compensation and also provides that if the application has not been filed in time, the claim shall cease to be enforceable. It is clear, therefore, that unless the Income-tax Officer had applied within the time limited, which was not the case, he could not claim payment out merely because of the principle of common law that the Union Government is entitled to priority of payment. The common law principle cannot override the provision of Section 42.
3. The appeals are, therefore, dismissed. No costs.