1973 (1) TMI 2

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....d 1953-54. It would, however, be convenient 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. The assessee-appellant is a limited company. Proceedings under section 23A of the Indian Income-tax Act, 1922 (hereinafter referred to as " the Act "), were started against the appellant-company as it had not declared any dividend during the year. The Income-tax Officer found that the income of the assessee-company had been determined in regular assessment to be Rs. 22,65,227 and despite that it had not declared any dividend. The income-tax Officer observed that there were only two big shareholders of the assessee-company, namely,....

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....on behalf of the assessee-company that JC Mills and PPI Co. were companies in which the public was substantially interested and, as such, the shareholding of these public companies should be considered to be shares held by the members of the public. The Appellate Assistant Commissioner did not go into the question as to whether or not the above-mentioned two companies were such in which the public was substantially interested. He observed that groups of the two companies were controlling the affairs of the assessee-company and, as such, the shares held by them could not be considered to be shares held by the members of the public. The appeal filed by the assessee was accordingly dismissed. The matter was then taken up by the assessee in ....

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....he Act were held to have been wrongly invoked. The order of the Income-tax Officer in this respect was consequently set aside. The question reproduced above was thereafter referred to the High Court. The High Court by a short order answered the question in the affirmative and in this connection relied upon an earlier decision of the Calcutta High Court in Commissioner of tax v. Tona Jute Co. Ltd. In appeal before us, Mr. Sen on behalf of the appellant has contended that the decision of the Calcutta High Court in Commissioner of Income-tax v. Tona Jute Co. Ltd. has been impliedly overruled by a decision of this court in the case of Shree Krishna Agency Ltd. v. Commissioner of Income-tax. This contention, in our opinion, is well founded. I....

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....hares as contemplated by the Explanation to section 23A of the Act. There is in the present case also no evidence to show that the directors had eliminated the element of transferability of shares. As such, we find that the decision of the High Court in answering the question against the assessee cannot be sustained. On an earlier date of hearing Mr. Ahuja, on behalf of the revenue, prayed for adjournment to ascertain whether there was any cogent material on the record to show that there was any group acting in concert which was in control of the assessee-company. The adjournment was granted. When the hearing of the case was resumed thereafter, Mr. Ahuja, on behalf of the department, frankly stated that he had not been able to find an....