The relevant assessment year is 1958 59, the accounting year being the year ending on March 31, 1958.
The assessee belongs to the well known family of Vadilal Lallubhai Mehta of Ahmedabad.
The members of this family who for the sake of companyvenience will hereinafter be referred to as the Mehta Group owned shares in and companytrolled several companypanies including certain managing agency companypanies, Those managing agency companypanies were Private Ltd. companypanies.
The managed companypanies were also companypanies in which the members of the Mehta Group had companytrolling interest.
2 and 1 of 1966.
This Group had also selling agency rights in the companypanies which they were managing.
On the companying into force of the Companies Act, 1956, the managing agency companypanies gave up their managing agency rights in order to safeguard their selling agency rights.
Sen and B. D. Sharma, for the appellant in C.A. No.
The assessees appeal to the Income tax Appellate Tribiunal was unsuccessful.
In addition he sold some shares to one of the family trusts.
Thereafter the assessee sold his share holdings to the employees of some Mehta Group companypanies or the relations of such em ployees.
Thereafter at the instance of the assessee, certain questions were referred to the High Court for its opinion.
The remaining shareholders were either number liable to pay any tax or were liable to pay tax at a lower rate than the assessee would have had to pay bad be received the amount distributed by the liquidators.
2006 2007 of 1971.
A few days after the sales in question, those managing agency employees went into voluntary liquidation.
1 139/69 .
1060 The Judgment of the Court was delivered by Hegde, J. The principal question of law arising in these appeals by certificate is whether on the facts and in the circumstances of each of these cases the Department was right in applying s. 44 F read with s. 2 6A c of the Indian Income tax Act, 1922 to be hereinafter referred to as the Act .
These shareholders included those persons who had newly purchased the shares.
Consequently the assets of those companypanies were distributed among the shareholders who were borne on the registers of the companypanies as on the dates of liquidation.
A. Palkhivala, S. T. Desai, M. C. Chagla, V. M. Tarkunde, K. Verma, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondents in C.A. Nos.
One of the new shareholders as mentioned earlier was a charitable trust which was number liable to pay any tax.
1139/69 .
1061 The Income tax Officer brought to tax a portion of the assets distributed on liquidation by applying s. 44 F read with s. 2 6A c of the Act.
CIVIL APPELLATE JURISDICTION C.A. Nos.
2348 2349/69 2006 2007/71.
A. Palkhivala, A. K. Verina, J. B. Dadachanji, 0.
C. Mathur and Ravinder Narain, for the respondent in C.A. No.
2348 2349/69 and 2006 2007/71 .
The Income tax Officer, the Appellate Assistant Commissioner and the Income tax Appellate Tribunal answered that question in favour of the Department but the High Court answered the same in favour of the assessee.
Appeals by certificate under Article 133 of the Constitution of India from the judgment and order dated January 15, 1966 of the Gujarat High Court in Ahmedabad in T.R. Nos.
The assessee in that case is Vadilal Lallubhai.
2348 of 1969.
He is assessed as an individual.
2348 2349 of 1969, 1139 of 1969 and Civil Appeals Nos.
The Appellate Assistant Commissioner agreed with this view.
Sen, B. B. A huja and B. D. Sharma for the appellant in C.A. Nos.
