TaxTMI 
TaxTMI 
1983 (6) TMI 38
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....t in shares was investment in specified assets. His contention was that the shares were allotted to him by reason of being a promoter of the company. The ITO allowed relief claimed under section 54E. However, the Commissioner considered that the order of the ITO was erroneous and prejudicial to the interests of the revenue and directed the ITO to withdraw the exemption. The Commissioner's reason was that it appeared from the prospectus that the promoters of the company was the assessee's HUF and, therefore, the relief could not be granted to the assessee in his individual capacity. 3. Before us the assessee's counsel, Shri H. M. Talati, has argued that the assessees in their investments also were promoters and the fact that the HUF had b....
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....istered and is a party to the preparation of the prospectus. The term does not include a person who has acted in a professional capacity, such as counsel, solicitor, accountant, printer and the like for persons engaged in the formation of the company. A person who does not take a prominent part may so act in the formation of the company as to bring himself under the term 'promoter'.... " Datta on the Company Law by C.R. Datta, Third Revised Edition, 1982, page 148. " Who are promoters ? The word 'promoter' conveys to the layman a picture of a person whose activities are directed specifically and deliberately towards the bringing into being of a company or companies : but just as, for the purpose of the Companies Acts, the word 'dir....
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....ota and paid for them out of the funds of the individuals. The assessee's counsel also argued that the name of the HUF had been put as promoter in the prospectus in order to derive the benefit of the reputation of the commercial house. He elaborated this by an illustration of a house of Birla's or of Tata's carrying a certain reputation which helped in raising of capital, etc. 4. On the other hand, the learned departmental representative has argued that the statement that HUF was the promoter had been made in the important document, namely, the prospectus which was filed in before the Government authority in all the seriousness and displayed before the public. He pressed this point further that if the assessee wanted to mention the in....
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.... identify them. The third quotation gives a more comprehensive meaning of that word so as to cover the case of any person who takes a part in forming the company and also states that the question is one of fact. The following passage from Gower's Principles on Modern Company Law, 4th edition, offers considerable guidance. " It will have been apparent from the foregoing that the expression 'promoter' covers a wide range of persons. Indeed it is still wider both professional promoter and the village grocer are promoters to the fullest extent in that each undertakes to form a company with reference to given object and set it going.... takes necessary steps to accomplish their purposes. But a person may be a promoter who has taken much less ....