BANERJEE, J. - (1.) IN this reference we are required to give our opinion on the following question : - - "Whether in the facts and circumstances of these cases, the Tribunal was right in holding that the directors of the respondent company had a controlling interest in it as contemplated by s. 2(21) of the EPT Act." This reference has been made at the instance of the CIT of Excess Profits Tax Act, West Bengal, and arises out of five consolidated applications made under the Excess Profits Tax Act covering the chargeable accounting periods ended 31st Dec., 1939, to 31st Dec., 1943. The point involved in them is the same. The dispute before the AAC and the Tribunal was whether the respondent company was or was not a director controlled company within the meaning of s. 2(21) of the Excess Profits Tax Act, 1940, during the chargeable accounting periods in question. The material portion of that section is as follows : "Statutory percentage" means - -(a) in relation to a business carried on by a body corporate (other than a company the directors whereof have a controlling interest therein), eight per cent. per annum ; . . . . (c) in relation to a business to which sub -cl. (a) does not apply, ten per cent per annum. If the respondent company is a director controlled company, then on the increase in its average capital, the statutory percentage allowed under that section will be 10 per cent. and if not, it will be 8 per cent. The respondent company was incorporated under the INdian Companies Act having a capital of Rs. 36 lacs divided into 3,60,000 shares of Rs. 10 each. During the chargeable accounting periods in question, these shares were held as follows : - - Article 90 of the Articles of Association of the respondent company is as follows : - - Name of shareholder. Number of shares held in C. A. Ps. ended 31 -12 -1939 and 31 - 12 -1940 Number of shares held in C. A. Ps. ended 31 -12 -1941,31 -12 - 1942 and 31 -12 -1943 1.M/s Aluminium Ltd. MONTREAL 3,59,790 3,59,600 2. Mr. L. G. Bash 10 ... 3. " P. J. Pathak 100 100 4. " Manu Subhedar 100 100 5. " H. K. Shah ... 100 6. " Kenneth Hall ... 100 "90. Where a company registered under the provisions of the INdian Companies Act or not is a member of this company a person duly appointed to represent such company at a meeting of this company in accordance with the provisions of s. 80 of the INdian Companies Act, 1913, shall not be deemed to be a proxy but shall be entitled to vote for such company on a show of hands and to exercise the same powers on behalf of the company which he represents as if he were an individual member of this company including the power to appoint a proxy whether special or general and the production at the meeting of a copy of such resolution appointing such representative duly signed by one director of such company and by the secretary (if any) and certified by them or him as being a true copy of the resolution shall on production at the meeting be accepted by this company as sufficient evidence of the validity of his appointment." Article 105 empowers Aluminium, Ltd., to appoint three permanent directors on the board of directors. Article 113 provides that the nominee director appointed by Aluminium, Ltd., shall act as chairman of the meeting of the directors.
(2.) THE first directors were Mr. Jeewanlal Motichand and Mr. Ramji Hansraj nominated by the respondent company, and Mr. L. G. Bash, Mr. C. G. Bowen and Mr. R. E. Powell nominated by Aluminium, Ltd. THE articles also provide that the directors nominated by Aluminium, Ltd., were entitled to retain office for life. All the life directors except Mr. Bash ultimately retired. Mr. Bash continued in that office. By several resolutions passed by the directors of Aluminium, Ltd., between 23rd May, 1935, and 20th October, 1942, it was resolved that Aluminium Ltd., "a corporation organised and existing under the Companies Act of the Dominion of Canada, hereby constitutes and appoints Mr. Lawson G. Bash its true and lawful agent and attorney -in -fact for it and in its name, place and stead to vote and/or from time to time to appoint special or general proxy to vote the said shares on behalf of Aluminium, Ltd., at any general or special meetings of the shareholders of Jeewanlal (1929), Ltd." The resolutions recite Article 90 set out above. The "said shares" in the resolutions refer to the shares owned by Aluminium, Ltd. and Jeewanlal (1929), Ltd. is the respondent company. The AAC held that Mr. Bash functioned in the dual capacity of a director of the assessee company and as an agent of Aluminium, Ltd. and that he was controlling the assessee company by exercising the voting rights in respect of the shares held by the foreign company as agent of the said company and not as a director of the assessee company, and on that view, he, in agreement with the ITO, treated the assessee as not a directorcontrolled company within the meaning of s. 2 (21) of the Excess Profits Tax Act. From this order there was an appeal to the Tribunal. The Tribunal held that in view of the power -of - attorney given to Mr. Bash by the Aluminium, Ltd., there was no room for doubt that the respondent company was a director controlled company and set aside the order of the Appellate Asstt. CIT. The Commissioner of the Excess Profits Tax thereupon asked the Tribunal to make a reference saying that the following question of law, among others, arose out of the order of the Tribunal : - - "Whether on the facts and in the circumstances of the case and on the construction of the power - of -attorney, the Tribunal was right in holding that the assessee was a company the directors whereof had a controlling interest therein." The Tribunal accordingly has made the reference and has asked for our opinion on the question formulated by it is stated above. This is the question of which we have to express our opinion.
(3.) ON behalf of the CIT, a point was taken by Dr. S. K. Gupta that Article 90 in the Articles of Association was ultra vires the Indian Companies Act and, therefore, was invalid, and consequently the power -of -attorney given to Mr. Bash was of no effect. Counsel referred to s. 80 of the Act, which is as follows : - - "A company which is a member of another company may, by resolution of the directors, authorise any of its officials or any other person to act as its representative at any meeting of that other company, and the person so authorised shall be entitled to exercise the same powers on behalf of the company which he represents as if he were an individual shareholder of that other company." The "company" in the section means a company incorporated under the Indian Companies Act. Aluminium, Ltd., is not a company incorporated under the Indian Companies Act. Applicant's counsel Dr. S. K. Gupta said that s. 80 of that Act had no application to the case of Aluminium, Ltd. He also pointed out that apart from s. 80 there was no other provision in the Act which authorised Aluminium, Ltd., to give such a power -of -attorney and so the power given to Mr. Bash was invalid. It is true that s. 80 does not apply and there is no provision in the Companies Act which expressly authorises the company to give such a power -of -attorney. But that does not mean that Aluminum, Ltd., cannot give such a power -of -attorney. A corporation has no body nor a soul and must, ex necessitate rei, act through some human agency. If this is so, I do not see any reason why Aluminium, Ltd., could not give such a power -of - attorney to Mr. Bash. Indeed the form of the power -of -attorney is taken from the Encyclopedia of Forms edited by Dr. Underhill and is also given in Palmer's Company Precedents.;