Income-tax Act-Section 23A-Company in which the public are not substantially interested-Control of the affairs of the Company-Meaning of - Income Tax - 4(47)-55/TEC

Circular Number: 44(LXXV_8) File Number: 4(47)-55/TEC Dated: 1-11-1955 Subject : Income-tax Act-Section 23A-Company in which the public are not substantially interested-Control of the affairs of the Company-Meaning of. A question has been raised whether a public company will be deemed to be a company in which the public are not substantially interested within the meaning of the Explanation to section 23A (inserted by the Finance Act, 1955) by reason only of the fact that the number of its directors at any time during the previous year is less than six. The case of such a company has to be considered under paragraph (iii) of the Explanation. It is not possible to give a cut and dried definition of the expression "control of the affairs of a company". It is hwoever, not the same as the running of the business from day to day by a director. It is, therefore, not necessary that there should be not less than six directors in order that section 23A should not apply. Sd. N.H. Naqvi Secretary, Central Board of Revenue.