2009 (8) TMI 832 - HC - Income Tax

Transfer of a capital asset by a subsidiary company to the holding company - requirement of Section 47(v) is that the whole of the share capital of the subsidiary company should be held by the holding company. - held that - In case one is to proceed on the basis that entire share capital of the subsidiary company should be held in the name of the holding company there cannot be any situation in which section 47(v) can apply. That is certainly not an interpretation which can be termed as ut res magis valeat quam pereat i.e. to make the statute effective rather than making it redundant Teja Singh 1958 (11) TMI 2 - SUPREME Court appeal stands dismissed

Summary

The High Court of Bombay, in a 2009 judgment, heard a case involving a dispute over the Companies Act, 1956. The Tribunal had previously made a finding in paragraph 9 of its order that the Act requires companies to have a minimum of two shareholders, making it impossible for a company to have less than two members. The Tribunal also noted that the whole share capital of a subsidiary company must be held by the holding company, but this does not necessitate that the capital be held in the name of the holding company. The Tribunal referred to a legal principle that statutes should be interpreted to be effective rather than redundant, and rejected the revenue's interpretation. The High Court found no fault with the Tribunal's view and dismissed the appeal, stating that no substantial question of law was raised. The judgment illustrates the importance of statutory interpretation and the need to avoid rendering provisions redundant.