1965 (12) TMI 9

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....ion under section 153C of the Indian Companies Act, 1913, questioning the appointment of some of the directors of the assessee-company. It is observed in the statement of the case that the learned counsel for the assessee attempted to point out to the Income-tax Appellate Tribunal (Delhi Bench " B ") that an application for appointment of a receiver had also been filed in the main petition, but the Tribunal found nothing on its records on which this assertion could be upheld. At the same time, that Tribunal considered it relevant to point out that there were certain observations in its own earlier order suggesting the existence of a prayer for the appointment of a receiver. In this application in the High Court, the contesting parties effected a compromise agreement in 1954. In the assessment proceedings in question, a sum of Rs. 551 was claimed as legal fees which included a sum of Rs. 250 stated to have been paid to Shri K. C. Malhotra as his consultation fee in connection with the aforesaid litigation. This amount was disallowed by the Income-tax Officer and the Appellate Assistant Commissioner confirmed this order. Appeals from the three assessment years 1953-54, 1954-55 and 19....

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....pany are being conducted as aforesaid. (3) No application under sub-section (1) shall be made by any member, unless-- (a) In the case of a company having a share capital, the member complaining-- (i) has obtained the consent in writing of not less than one hundred in number of the members of the company or not less than one-tenth in number of the members, whichever is less, or (ii) holds not less than one-tenth of the issued share capital of the company upon which all calls and other sums due have been paid ; and (b) in the case of a company not having a share capital, the member complaining has obtained the consent in writing of not less than one-fifth in number of the members.... (4) If on any such application the court is of opinion-- (a) that the company's affairs are being conducted as aforesaid, and (b) that to wind up the company would unfairly and materially prejudice the interests of the company or any part of its members, but otherwise the facts would justify the making of a winding up order on the ground that it is just and equitable that the company, should be wound up, the court may, with a view to bringing to an end the matters complained of....

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....rs just and equitable, to make any such interim order as it thinks fit for regulating the conduct of the affairs of the company pending the making of a final order in relation to the application. (9) Where any manager, managing agent, managing director or any other director or any other person who has not been impleaded as a respondent to any application under this section applies to be made a party thereto, the court shall, if it is satisfied that his presence before the court is necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the application, direct that the name of any such person be added to the application. (10) In any case in which the court makes an order terminating any agreement between the company and its manager, managing agent or managing director or any of its other directors, as the case may be, the court may, if it appears to it that the manager, managing agent, managing director or other director as the case may be, has misapplied or retained or become liable or accountable for any money or property of the company or has been guilty of any misfeasance or breach of trust in relation t....

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....ing that the Dutch company had acquired rights in a process for hardening oils and that the parties were desirous of formulating a scheme for the merger of their assets or the unification of their financial and commercial interests, etc., but that such a scheme could not at that time be fully elaborated to their satisfaction, and that it was desirable to regulate their mutual relations and modify and extend the principal agreement in the manner specified. According to the case stated by the Commissioners for the General Purposes of the Income Tax for the City of London, each company carried on its business independently but, in general, they observed the terms of their agreements during 1908 to 1913 and their profits were accounted for for these years. Payments made to the Dutch company were deducted as an expense and when made by the Dutch company were brought in as a receipt in making up the assessee's profit and loss accounts for the years in which payments were made or received. During the war, the two companies did not operate the agreement, and after peace was restored, they found it desirable to enter into a fresh agreement in an endeavour to render workable the two previous....

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....received by the assessee in the circumstances narrrated in the reported case could properly be described as an item of profit arising or accruing from the carrying on of their trade which ought to be credited as an income receipt. Clearly, to find an answer to that question, would involve consideration of aspects very much different from those which confront us. In Morgan v. Tate & Lyle Ltd. the assessee-company was carrying on sugar refining business in Britain. It refined roughly 53 per cent. of all the sugar refined in the country. During the years immediately following the political changes in Britain in 1945, the directors of the assessee-company became increasingly concerned by reason of the Labour Government's inclination towards nationalisation of sugar industry. In 1949, the election manifesto of the Labour Party in this connection gathered great momentum. In September, the company resolved to empower its directors to do everything to meet the threats of the nationalisation. By the time the decision to intensify the anti-nationalisation propaganda campaign was taken, the coal, the railway, gas and electricity industries had been nationalised, which, broadly stated, took....

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....y Act, 1953 (before amendment in 1958), by a resident company incorporated outside India on the death of the shareholders not domiciled in India. This amount was claimed as lawful deduction under section 10(2)(xv) Indian Income-tax Act, 1922, and the Supreme Court, repelling this claim, held that, although the amounts paid were " expenditure ", they were not allowable under section 10(2)(xv) as business expenditure because the payments were not " for the purpose of the business ". The payments had nothing to do with the conduct of its business, and the obligation of the company to pay estate duty was a statutory duty connected with the business, though the occasion for the imposition arose because of territorial nexus afforded by the accident of its doing business in India. It was also observed that the expression " for the purpose of the business is wider in scope than the expression " for the purpose of earning profits. But, however wide the meaning of the expression, its limits are also implicit in it. The purpose must be the purpose of the business ; in other words, the expenditure incurred must be for the carrying on of the business and the assessee should incur it in his capa....