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TMI Blog1973 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... n and, secondly, that, on the merits of the case, the order is not sustainable in law. The writ petition has been contested on behalf of the respondents and a counter-affidavit has been filed by Shri Jagdish Chand Kalra, Deputy Secretary, Central Board of Direct Taxes, Ministry of Finance, dated 27th May, 1967. In this counter-affidavit, the contentions raised in the writ petition have been contested and reasons have been given as to why the application of the petitioner was refused. In substance, in the counter-affidavit, it has been urged that the petitioner-company had failed to satisfy condition No. (ii) mentioned in the statutory notification and so the application was refused. With regard to the non-speaking nature of the order, it has been contended that the company did not co-operate with the Director of Inspection in arriving at the findings with regard to the requirements of the notification and that the matter had been thoroughly discussed orally between the Director of Inspection and the representatives of the company and the company knew the reasons for the rejection and, therefore, it was not necessary to incorporate them in the impugned order or formally communicate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enced by extraneous considerations of policy or expediency the court insists upon disclosure of reasons in support of the order on two grounds : one, that the party aggrieved, in a proceeding before the High Court or this court, has the opportunity to demonstrate that the reasons which persuaded the authority to reject his case were erroneous ; the other, that the obligation to record reasons operates as a deterrent against possible arbitrary action by the executive authority invested with the judicial power." In this case, the Supreme Court was pleased to set aside the order of the Central Government passed upon revision. Mr. Aiyar, counsel for the respondents, has cited a single Bench authority of this court in Dalmia Cement (Bharat) Ltd. v. Income-tax Officer (Civil Writ Petition No. 996 of 1971 decided on 11th February, 1972). This was a case where the party had asked the Income-tax Officer for permission to change the previous year under section 3(4) of the Income-tax Act of 1961. In repelling the contention of the petitioners, the court observed that it was not possible to accept the contention that no reasons had been given as to why the permission had been refused and, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h weighed with the statutory authorities in passing the order. See the observations in Associated Tubewells Ltd. v. R. B. Gujarmal Modi. As pointed out by the Supreme Court in the above mentioned judgment, incorporation of the reasons is necessary to demonstrate that the authority has considered the matter according to law and that its order may be subjected to judicial review. The contention of Mr. Aiyar fails. Coming to the second contention, the statutory notification may be quoted in extenso : " The Governor-General in Council is pleased to exempt from super-tax so much of the income of any investment trust company as is derived from dividends paid by any other company which has paid or will pay super-tax in respect of the profits out of which such dividends are paid. Explanation.- For this purpose an Investment Trust Company means a company in respect of which the Governor-General in Council is satisfied that :--- (i) it is a company having for its principal business the acquisition and holding of investments in the stocks, shares, bonds, debentures or debenture-stocks of other companies or in securities issued by public authorities ; (ii) it is not a company formed for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies is separately enclosed and is marked as annexure " R-7 ". (a) That it was found that Sahu Jain Ltd. was appointed as managing agents of the four companies mentioned below with the help of the voting power of Bharat Nidhi Limited as under : ----------------------------------------------------------------------------------------------------------------------------------------------- Name of the company Date of Total voting Petitioner's % of petitioner's meeting power voting vote out of power the total including voters in Col. 3 present ------------------------------------------------------------------------------------------------------------------------------------------------ Rohtas Industries 26-3-60 25,08,000 685,471 27% Bharat Collieries 15-2-60 96,960 54,300 67.4% S. K. G. Sugar Company 4-3-60 63,755 50,000 78.4% Jaipur Udyog Ltd. 29-11-55 14,94,700 3,00,000 20.1% ------------------------------------------------------------------------------------------------------------------------------------------------ (b) When the extrordinary general meeting was held on 26th March, 1960, for appointment of Sahu Jain Ltd. as managing agents of Rohtas Industries Ltd., the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that the acquisition of the shares by the petitioner-company enabled them to influence the voting power and helped the Sahu Jain Ltd. to be appointed managing agents of a company mentioned therein. Here again, there is a fallacy. If any company or person holds shares in any other company, it is natural that it will have a right to vote which it may exercise and thus may ultimately influence the final result in a small or large measure, but that is far from the position that the petitioner-company was in a position to exercise effective control over the whole company. The total number of shares held by the petitioner-company has been analysed and mentioned in the earlier part of the judgment. The fact that at some particular meetings the other members were not present and the petitioner's few votes helped in securing the majority of the votes for a proposal is wholly immaterial. For example, in Bharat Collieries Limited, in a meeting held where the total voting power was 97,960 and the voting power of the petitioner-company was 54,300, the result yielded a majority of 67.4 per cent., which would obviously be in excess of the total voting power of the petitioner in Bharat Collier ..... 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