On appeal before the Appellate Assistant Commissioner, it was urged on behalf of the assessee companypany that JC Mills and PPI Co. were companypanies in which the public was substantially interested and, as such, the share holding of these public companypanies should be companysidered to be shares held by the members of the public.
This fact was held to be a definite restriction on the transfer of shares.
After deducting Rs.
Appeals by certificate from the judgment and order dated February 24, 1969 of the Calcutta High Court in Income tax Reference Nos.
The matter was then taken up by the assessee in appeal before the Income Tax Appellate Tribunal.
22,65,227 the balance of Rs.
14,23,703 was deemed by the Income Tax Officer to have been distributed amongst the shareholders.
It was further observed that the shares of the assessee companypany were number quoted in stock exchange.
Sen, Leila Seth, U. K. Khaitan and B. P. Maheshwari for the appellant.
The assessee appellant is a limited companypany.
210 and 211 of 1964.
Proceedings under section 23A of the Indian Income Tax Act, 1922 hereinafter referred to as the Act were started against the appellant companypany as it had number declared any dividend during the year.
The appeal filed by the, assessee was accordingly dismissed.
CIVIL APPELLATE JURISDICTION Civil Appeal Nos.
The Judgment of the Courts was delivered by KHANNA, J. These two appeals on certificate are directed against the judgment of Calcutta High Court whereby it answered the following question in the affirmative and in favour of the revenue Whether in the facts and circumstances of the case, the provisions of section 23A were rightly invoked.
The Income Tax Officer observed that there were only two big shareholders of the assessee companypany, namely, Jiyajeerao Cotton Mills Ltd., Birlanagar Gwalior hereinafter referred to as JC Mills and Punjab Produce and Investment Co. Ltd. hereinafter referred to as PPI Co. JC Mills, in the opinion of the Income Tax Officer, companyld number be regarded as a member of the public as it was being represented on the Board of Directors through its General Manager D. P. Mandalia.
It would, however, be companyvenient to set out the facts relating to the year 1952 53 because the decision in regard to the assessment for that year would also govern the assessment for the following year.
He observed that groups of the two companypanies were companytrolling the affairs of the assessee companypany and as such, the, shares he Id by them companyld number be companysidered to be shares held by the members of the public.
B. Ahuja, S. P. Nayar and R. N. Sachthey, for the respondent.
The Income Tax Officer also referred to article 33 of the Memorandum and Articles of Association of that assessee companypany, according to which the directors companyld without assigning any reason decline to register a transfer to a transferee of whom they did number approve.
The Income Tax Officer found that the income of the assessee companypany had been determined in regular assessment to be Rs.
2177 2178 of 1969.
The matter relates to assessment years 1952 53 and 1953 54.
8,40,524 on account of tax payable on Rs.
As the shares held by the public, in the opinion of the Income Tax Officer, came to less than 25 per cent of the total shareholding, the assessee companypany was held to fall within the purview of section 23A of the Act.
PPI Co. was found to be a companypany to which the provisions of section 23A of the Act were applicable.
It was also pointed out that the PPI Co. was a companypany to which the provisions of section 23A did number apply.
A companyy of the order of Appellate Assistant Commissioner made in appeal filed by PPI Co. was produced before the Tribunal.
The Appellate Assistant Commissioner had by that order set aside the order of Income Tax Officer and had held that section 23A of the Act did number apply to PPI Co. The Tribunal observed that both JC Mills and PPI Co. were public companypanies in which the public were substantially interested and, therefore, it was number companyrect to say that the shares held by the two companypanies were companytrolled by a group of persons as distinguished from members of the public.
