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TMI Blog1971 (7) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 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 which tax payable amounted to Rs. 4,05,492. The surplus available for distribution of dividend was Rs. 5,49,166. No dividend, however, was distributed although at the meeting held on June 8, 1955, the accounts which were approved showed a net profit of Rs. 6,81,298. The controversy before the Income-tax Officer centered on the applicability of the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 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 Explanation thereto. That sub-section provides, inter alia, that nothing contained in the section shall apply to any company in which the public are substantially interested. The text of the Explanation, the interpretation of which is the subject-matter of dispute, is as follows :-- " Explanation.--For the purposes of this section, a company shall be deemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingle 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 that clause (a) was not relevant and had no application. It was also not disputed that the assessee had fulfilled the conditions contained in sub-clause (b)(i) and (b)(ii) of the Explanation. The sole question which had to be decided by the Tribunal and the High Court was whether the assessee had fulfilled the conditions set out in sub-clause (b)(iii) of the Explanation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsons. 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 persons ; (2) If it is not a private company as defined in the Indian Companies Act, 1913, and the shares carrying more than 50% of the total voting power were at no time during the previous year held by less than 6 persons." According to the Tribunal sub-clause (iii) of clause (b) sought to impose two distinct and separate conditions, namely, (1) control of the affairs of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 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 language of sub-clauses (ii) and (iii) of clause (b) is different. The former relates to a positive state of affairs whereas the latter lays down negative conditions. The word "or" is often used to express an alternative of terms defined or explanation of the same thing in different words. Therefore, if either of the two negative conditions which are to be found in sub-clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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