TMI Blog1971 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... al leave from a judgment of the Calcutta High Court in an income-tax reference. The assessee is a limited company incorporated under the erstwhile Gwalior State Companies Act which did not make any distinction between a private company and a public company. The paid-up capital of the company was Rs. 25,00,000 composed of 25,000 ordinary shares of Rs. 100 each. These 25,000 ordinary shares were held by 17 shareholders in all. It was also common ground that the shares carrying more than 50% of the total voting power were held by less than 6 persons during the accounting period. The assessment year was 1955-56, the accounting year being the one ending on March 31, 1955. The total income assessed for the aforesaid year was Rs. 9,54,658 on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eferred the following question of law for the opinion of the High Court : " (1) Whether, on the facts and in the circumstances of the case, the assessee-company is one in which the public are substantial interested within the meaning of the Explanation to section 23A of the Income-tax Act as it stood at the relevant time ? (2) Whether, on the facts and in the circumstances of the case, the imposition of the additional super-tax under section 23A without recourse to the provisions of section 34(1) was legal and valid ?" Section 23A of the Act confers power on the Income-tax Officer to assess companies to super-tax on non-distributed income in certain cases. We are concerned, in the present appeal, only with sub-section (9) and the E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbers of the public ; and (iii) the affairs of the company or the shares carrying more than fifty per cent. of the total voting power were at no time during the previous year controlled or held by less than six persons (persons who are related to one another as husband, wife, lineal ascendant or descendant, brother or sister, as the case may be, being treated as a single person and persons who are nominees of another person together with that other person being likewise treated as a single person) : Provided that in the case of any such company as is referred to in sub-section (4), this clause shall apply as if for the words 'more than fifty per cent.' the words 'more than sixty per cent.' had been substituted." It is quite clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year by less than six persons. The Tribunal disposed of this contention in the following manner : " Sub-clause (iii) is divided into two parts : the first part relates to the affairs of the company being controlled by not less than 6 persons and the second part relates to holding of shares carrying more than 50% of the total voting power by not less than 6 persons. Both these parts are joined with the main part of clause (b) by the use of the conjunctive word 'and' so that the proper construction of the sub-clause (iii) would be as follows :-- (1) If it is not a private company as defined in the Indian Companies Act, 1913, and the affairs of the company were at no time durin the previous year controlled by less than six pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hares carrying the requisite percentage of the total voting power by not less than 6 persons, would have to be fulfilled. On behalf of the assessee a good deal of reliance has been placed on a decision of this court in Star Company Ltd. v. Commissioner of Income-tax. In that case sub-clause (b)(ii) came up for consideration and it was held that the two parts of the explanation contained in that sub-clause were alternative. In other words, if one part was satisfied, it was unnecessary to consider whether the second part was also satisfied. Thus, the word "or" was treated as having been used disjunctively and not conjunctively. The same reasoning is sought to be invoked with reference to sub-clause (b)(iii). It is significant that the l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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