TMI Blog1996 (9) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... 8)(a). 3. The assessee-company filed its return in the status of public limited company. The previous year of the company is the calendar year. The capital of the company consisted 75,000 shares of Rs. 100 each out of which 40% shares were held by the Government of Maharashtra in the beginning of the year. The company issued right shares during the year and due to this, holdings of the shares by the Maharashtra Government was reduced to 27.31% in the month of November 1986. The shares of the company are not quoted on the stock exchange. Since the shareholding of the Maharashtra Government fell down below the limit of 40% it was held by the Assessing Officer that the status of the company was a company in which the public were not substant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld be construed strictly. It was further argued by him that Court should avoid the construction which would reduce the legislation to futility and should rather accept the construction which would achieve the legislative intend. In support, he relied on the main principles of Interpretation by Maxwell, 12th Edition appearing at page 45. 6. Rival contentions have been considered carefully. No direct case law is available on this issue. So we have to resolve the controversy on the basis of the language employed by the Legislature, the object of the enactment and the rules of interpretation. We have given our deep thought to the controversy raised before us. For the reasons given hereinafter, we are of the view that the status of the compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the year' in other part of section 2(18) but the question is whether the omission of such words in clause (a) should persuade the Court to take a liberal view. In such a situation, the Courts have to take into consideration the object to be achieved by the Legislature. If the liberal interpretation, as contended by the learned counsel for the assessee, frustrate the object, then in our view such construction should not be allowed. The construction which advances the object has to be applied. 9. Let us examine the object for which section 2(18) has been enacted. As stated earlier, the object is to provide concessional rate of tax on the profits earned by such companies. It is now trite law that profits of an assessee accrues only on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the present case. 11. In view of the aforesaid discussion, we are of the considered view that the shareholding of the company or the Reserve Bank of India must be 40% or more throughout the year. Non-user of the words 'throughout the year' or 'at the end of the year' in section 2(18)(a) cannot compel us to take a contrary view because the contrary view, if taken, would frustrate the object rather than to achieve the same. Since in the present case, the shareholding of the Maharashtra Government has been reduced to 27.31% in the month of November, we hold that the assessee-company cannot be held to be a company in which the public are substantially interested. Therefore, we uphold the order of the CIT(A) on this issue. 12. The next g ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
