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Income tax du...

Question

Income tax due and payable within $12$ months before the commencement of winding up is treated as _____________.

A

Unsecured debt

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B

Preferential debt

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C

Unsecured credits

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D

Liquidation expenses

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Solution

The correct option is B Preferential debt
Preferential debt is basically the debt which is paid in prior to all the other debts of the company. Income tax due is the debt of the company and if it is paid within 12 months prior to commencement of winding up will be treated as preferential debt.

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