TMI Blog1978 (6) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the revenue, the following question has been referred to us for our determination : " Whether, on the facts and in the circumstances of the case, the assessment for the year 1959-60 could be validly reopened under section 147(b) of the Income-tax Act, 1961? " The Central Provinces Railway Company Limited, the assessee, is a public limited company managed by Killick Industries Ltd. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the latter would require the sanction of the managed company by a special resolution and also approval of the Central Government. The assessee-company thereafter convened an extraordinary general meeting of its shareholders and a special resolution was passed authorising the payment of interest and steps were also taken to obtain the approval of the Central Government, for such payment. The Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d passed a special resolution authorising payment of interest. In spite of the opposition of the assessee, the ITO completed the assessment by adding back the amount of Rs. 270, being the amount of interest paid by the assessee-company to its managing agents. In an appeal by the assessee before the AAC, he set aside the assessment order on the ground that the reopening of the assessment was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no case for the reopening of assessment either under s. 147(a) or s. 147(b) of the Act. He submitted that they were in error in taking the view that the issue of a notice under s. 148 could not be upheld. The reopening of the assessment for the year in question was sought to be justified on the ground that payment of interest of Rs. 270 by the assessee to the managing agents was not legal. So fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a clear view was taken by me, sitting as a single judge of the court, that such a loan by a managing agent to the managed company did not require the sanction of the company by a special resolution or the approval of the Central Government ; there was no question of any part of the income of the company escaping assessment. In the result, the question referred to us is answered in the negative. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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