Sabyasachi Mukharji, J. - (1.) This reference under Section 256(1) of the Income-tax Act, 1961, relates to the assessment years 1958-59, 1961-62 and 1962-63. We are concerned here with the application of Section 23A of the Indian Income-tax Act, 1922, for the first two years and Section 104 of the Income-tax Act, 1961, for the last year. The question involved in this reference is whether the company can be deemed to be one in which the public were substantially interested within the meaning of the provisions of the aforesaid sections referred to hereinbefore. The relevant provisions of Section 23A of the Indian Income-tax Act, 1922, was Clause (b) of Explanation 1 of Section 23A which was as follows : "Explanation 1.--For the purposes of this section, a company shall be deemed to be a company in which the public are substantially interested--...... (b) if it is not a private company as defined in the Indian Companies Act, 1913 (VII of 1913), 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, and in computing the number of six persons aforesaid, the Government or any corporation established by a Central, State or Provincial Act or a company to which the provisions of this section do not apply shall not be taken into account, and persons who are relatives of one another and persons who are nominees of any other person together with that other person shall be treated as a single person, the expression ' relative ' in this context meaning husband, wife, lineal ascendant or descendant, brother or sister :......"
(2.) Similar in law is the position for the assessment year 1962-63 for which the provisions of Section 104 of the Income-tax Act, 1961, have also to be guided by identical considerations. The Income-tax Officer found that in the case of the assessee the number of shares issued and subscribed was 1,50,000 in relation to the assessment year 1958-59. Out of this, the Income-tax Officer found that 80,210 shares were held by the following persons: JUDGEMENT_353_ITR109_1977Html1.htm
(3.) Shri R. P. Goenka and Jagadish Prosad Goenka are brothers and sons of Shri K. P. Goenka. Smt. Sushila Devi Goenka is the wife of Shri R. P. Goenka. As a consequence of this, according to the Income-tax Officer, for the assessment year 1958-59, the company could not be deemed to be one in which the public were substantially interested because it did not satisfy the conditions specified in Sub-clause (iii) of Clause (b) of Explanation 1 of Section 23A of the Indian Income-tax Act, 1922, to which we have referred before. The position of shareholding is deemed to be the same in respect of the two assessment years 1961-62 and 1962-63. The law applicable for the said assessment year 1961-62 was the same as that for 1958-59. For the assessment year 1962-63, the corresponding provisions of the Income-tax. Act, 1961, read with Section 2(18)(b)(iii) and 2(41), which were in identical terms, were considered by the Income-tax Officer. The Income-tax Officer, therefore, levied additional super-tax for all the three assessment years in question inasmuch as the dividends distributed fell short of the statutory percentage. We need not refer to the actual amount distributed and how it fell short because this point is not in dispute before us.;