Family relationship alone does not prove concerted shareholder action; section 23A could not apply without evidence of common control.

Section 23A applies only where the statutory conditions for treating a company as one in which the public were substantially interested are not met. Mere family relationship among shareholders does not by itself prove that they were acting in concert; the revenue must show concerted action or other material demonstrating that the public interest requirement is not satisfied. The Tribunal's finding that such proof was lacking was treated as a factual conclusion based on the evidence, and no perversity or legal error was shown. The tribunal also acted lawfully in proceeding on the material before it without taking further evidence, so section 23A was held inapplicable.

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Issues: Whether the assessee-company was a company in which the public were substantially interested so as to be outside section 23A; and whether the Tribunal's finding, based on the supplementary statement of case, that the relevant shareholders were not shown to be acting in concert was perverse or unsupported by the evidence.

Analysis: Section 23A applied only where the statutory conditions for treating a company as one in which the public were substantially interested were not satisfied. The material question was whether the shares carrying the requisite voting power were beneficially held by members of the public. The Court accepted that mere relationship between shareholders did not by itself establish concerted action. It further held that the Tribunal's conclusion that the department had not proved that the relevant family shareholders were acting together was a finding of fact based on the evidence, and that no perversity or legal error was shown. The Court also declined to interfere on the ground that additional evidence had not been taken, holding that the Tribunal had not acted illegally in construing the earlier direction and in proceeding on the material before it.

Conclusion: The Tribunal was justified in holding that section 23A was not applicable to the assessee-company for the assessment years in question, and the departmental challenge failed.

Final Conclusion: The reference was answered against the revenue and the assessee succeeded on the substantive tax issue.

Ratio Decidendi: For section 23A, the mere fact of family relationship among shareholders does not establish that they were acting in concert; unless the revenue proves concerted action or other material showing that the public interest requirement is not met, the company cannot be brought within the section on that basis alone.

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