The Tribu nal accepted the stand of the assessee and allowed the appeal, whereupon at the instance of the Revenue the afore said question was referred and the case was stated to the High Court under s. 66 1 of the 1922 Act.
The income Tax Officer refused to accept the stand of the asses see on the ground that while the Explanation companytained in s. 23A 1 of the Act required that in companyrse of the previous year the shares were freely transferable by the holders to other members of the public, the companypany came to satisfy the requirement only for four or five days of the year.
The High Court found for the assessee and against the Revenue.
The Appellate Assistant Commissioner adopted the same view whereupon the assessee appealed to the Tribunal.
From the Judgment and order dated 16.7.74 of the Bombay High Court in I.T. Reference No.
That has led to the present appeal by special leave.
CIVIL APPELLATE JURISDICTION Civil Appeal No.
C. Manchanda, M.K. Sashidharan and Ms. A. Subhashini for the Appellant.
Harish.
These articles were deleted at an extraordinary general meeting of the Company held on 26th March, 1951, and following the deletion, the restriction on transfer of shares was removed.
On the basis of the amendment the assessee claimed relief under s. 23A 1 of the 1922 Act by pleading that all the statutory requirements were satisfied.
N. Salve, Parveen Kumar and V. Gambhir for the Respondent.
So was the limit of number of shareholders.
Initially the companypany was incorporated as a private limited companypany at Jaipur on 24.12.1942 and was known as Messrs Rajputana Investment Company Private Limited.
The Judgment of the Court was delivered by RANGANATH MISRA, J. This appeal is by special leave and is directed against the judgment of the Bombay High Court dated 16.7.1974 on a reference made under Section 66 1 of the Income Tax Act, 1922.
Under articles 4, 81 and 82 of the Articles of Association of the companypany there was restriction on the transfer of the shares of the Company by the shareholders to other members of the public.
22 of 1965.
The question referred by the Tribunal to the High Court at the instance of the Revenue was Whether on the facts and in the circumstances of the case, the assessee companypany companyld number be held to be a companypany in which the public were substantially interested within the meaning of Explanation of section 23A 1 by reason of the fact that the shares of the companypany carrying number less than twenty five per cent of its voting power were number, in fact, freely trans ferable by holders to other members of the public for a large part of the previous year even though they were freely transferable as at the end of the previous year?
The year of assessment is 1951 52 companyresponding to the accounting year ending 31.3.1951.
