TaxTMI 
TaxTMI 
1986 (1) TMI 164
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....WT Act. But the WTO in the cross of examination found that, of the shares held by the assessee trust, the shares in the company of Usha Sales (P) Ltd. were hit by the provisions of s. 13(3) of the IT Act r/w s. 21A of the WT Act. On that view he held that these shares could not qualify for exemption. Valuing these shared at Rs. 54,968 he levied tax for the asst. yr. 1974-75. For the asst. yr. 1975-76 he brought to tax the shares in this company valued at Rs. 1,12,256. Similarly the the value of these shares worked out at Rs. 1,22,598 for the asst. yr. 1976-77 and wealth-tax was levied thereon. But for the asst. yr. 1977-78 which assessment was made under s. 16(5) of the WT Act the shares held by the assessee trust in M/s Jay Engg. Works Ltd....
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....plicable but according to him that was not the correct view because irrespective of the mode of acquisition, it is the holding of shares that it referred to in s. 13(3) of the IT Act and that is only relevant. But Shri G. C. Sharma appearing for the assessee submitted without depending upon the decision of the Tribunal in the case of Sir Shanker Lal Foundation that the voting power as reckoned by the ITO was totally erroneous and filed before us a statement showing how the voting power would be below 20 per cent mentioned in s. 13(3) of the IT Act. Proceeding on that footing he submitted that since the voting power was less than 20 per cent there is no question of the share in the company Usha Sales (P) Ltd. being treated as prohibited pers....
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....d these arguments and we are in agreement with the argument of the ld. advocate for the assessee. For the asst. yr. 1974-75 the shares held by the founding members contributors and relatives was 44060 in Usha Sales (P) Ltd. That was also the amount arrived at by the WTO. There was therefore no disagreement to that extent. The total issue of the enquire share capital was 1,80,000 and preference shares 60,000. The voting power of both equity and preference shares put together works out to 96,000 but the WTO computed it at 36,000. He excluded the voting power attached to the preference shareholdings. The question now is whether the voting power of preference shareholders should or should not be excluded for the purpose of finding out the total....
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....ation extracted above. It came to 24.4 per cent because the ITO excluded the votes attached to the preference shares in calculating this percentage. This point also has come up for consideration in the case of WTO vs. Sir Shanker Lal Foundation in WTA Nos. 271 & 272 of 1980 for the asst. yrs. 1973-74 and 1974-75. The bench had upheld such a view. In fact that was the view taken by an earlier Bench of the Tribunal which they followed for these years. We therefore hold that the votes held by the prohibited persons does not exceed the percentage fixed in the Explanation extracted above and consequently they cannot be treated as prohibited persons hit by s. 13(3) of the IT Act and s. 21A of the WT Act i.e., to say that there is no question of t....