# COMMISSIONER OF INCOME-TAX, WEST BENGAL v. EAST COAST COMMERCIAL CO. LTD

- **Citation:** [1967] 1 S.C.R. 821
- **Court:** Supreme Court of India
- **Decided:** 1967
- **Bench:** J. C. Shah, V. RAMAsWAMI, V. BHAllGAVA
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/commissioner-of-income-tax-west-bengal-v-east-coast-commercial-co-ltd-3921
- **Pages:** 10

## Headnote

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Income Tax Act (11 of 1922), s. 23-A-Company In which pubUc are
not substantially interested-Test for.
Taxation of Income (Investigation
Commission) Act, 1947 declared
ultra vires-Admissions recorded by Authority acting under Act-Admisibility in evidence.
Members of a family held 4,015 shares, out of 4,391 shares in the reopondent company, which was a public limited Company. In the course
of investigation under the Taxation of Income (Investigation Commission)·
Act, 194 7, the heads of the various branches of the family admitted that
the shares were purchased by them out of their joint income which had not
been disclosed and that a majority of the shares were held benaml. An
offer of settlement was also made that a single assessment may be made in
respect of the "secreted income" treating tilem as an association or persons
and that every member of the family be treated as jointly and severally
liable to pay tax on that income. For the assessment years 1950-51 and
1951-52, the Income-tax Officer commenced proceedings under s.
23A of the Income-tax Act, 1922, and held that the Company was one in
which the public were not substantially interested and that its affairs were
under the control of the members of the family. He passed an order under
the section that the undistributed ponion of the assessable income of the
Company as computed for income-tax purposes and reduced by the
amount of income-tax and super-tax shall be deemed to have been distributed as dividends among the share-holders. The order was confirmed by tho
Appellate Assistant Commissioner. The Income-tax Appellate Tribunal roversed the order. The Tribunal held that the offers made by the members
of the family to the Income-taX Investigation Commission were not relevant in determining whether the Company was one in which the public
were not substautially interested, and that from the fact that the members
of the family held 4,015 •hares, it could not be inferred that the sb.ares
were jointly acquired, or that the members exercised control over the
affairs of the Compal'ly. The Tribunal also observed · that there was no
material placed by the Department to show that the members of the family
actually controlled the voting or acted in concert so as to bring the company within s. 23A. The Tribunal, therefore, held that the section did not
apply to the Company since it was not established that that the Company
was one in which the public were not substantially interested, even though
the members of the family held more than 75% of the shares i-ssued by
the Company. On .a reference,. the Hi~h Court confirmed the order of the
Tribunal holding that even on the finding that the members of the family
were in a position to control the affairs of the Company, there was no
evidence of any overtact showing that they were acting in concert and
thereby constituted a block.
In appeal to this Court,
HELD : The approach to the problem by the Tribunal and High Court
was erroneous. It was for the Tribunal to determine, ha'ling regard to
ordinary human experienC<> whether it may be safely taken that the members of the family must have acted together as a controlling block. That
822
SUPREME COURT RBPORTS
[1967] l S.C.R
enquiry had not been made and the case was decided on the application of
an erroneous test.
[830 C-D]
(i) In deciding whether an order under s. 23A (as on. the relevant date)
is called for, it must be decided in the first instance whether there wu a
group of penoos acting in concen holding a sufficient number of shares
which may control the voting as a block. It is sufficient, if having regard
to their relationship, their conduct, their common interest etc. it may be
inferred that they must be acting together : evidence of actual concerted
acting is normally difficult to obtain and is not insisted upon. It is the
holding in the aggregate, of a majority of the shares issued, by a pel"°'1
or persons acting 10 concen in relation to the affairs of the company which

## Text

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COMMISSIONER OF INCOME-TAX, WEST BENGAL
v.
EAST COAST COMMERCIAL CO. LTD.
October, 11, 1966
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[J. C. SHAH, V. RAMAsWAMI AND V. BHAllGAVA, JJ.j
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Income Tax Act (11 of 1922), s. 23-A-Company In which pubUc are
not substantially interested-Test for.
Taxation of Income (Investigation
Commission) Act, 1947 declared
ultra vires-Admissions recorded by Authority acting under Act-Admisibility in evidence.
Members of a family held 4,015 shares, out of 4,391 shares in the reopondent company, which was a public limited Company. In the course
of investigation under the Taxation of Income (Investigation Commission)·
Act, 194 7, the heads of the various branches of the family admitted that
the shares were purchased by them out of their joint income which had not
been disclosed and that a majority of the shares were held benaml. An
offer of settlement was also made that a single assessment may be made in
respect of the "secreted income" treating tilem as an association or persons
and that every member of the family be treated as jointly and severally
liable to pay tax on that income. For the assessment years 1950-51 and
1951-52, the Income-tax Officer commenced proceedings under s.
23A of the Income-tax Act, 1922, and held that the Company was one in
which the public were not substantially interested and that its affairs were
under the control of the members of the family. He passed an order under
the section that the undistributed ponion of the assessable income of the
Company as computed for income-tax purposes and reduced by the
amount of income-tax and super-tax shall be deemed to have been distributed as dividends among the share-holders. The order was confirmed by tho
Appellate Assistant Commissioner. The Income-tax Appellate Tribunal roversed the order. The Tribunal held that the offers made by the members
of the family to the Income-taX Investigation Commission were not relevant in determining whether the Company was one in which the public
were not substautially interested, and that from the fact that the members
of the family held 4,015 •hares, it could not be inferred that the sb.ares
were jointly acquired, or that the members exercised control over the
affairs of the Compal'ly. The Tribunal also observed · that there was no
material placed by the Department to show that the members of the family
actually controlled the voting or acted in concert so as to bring the company within s. 23A. The Tribunal, therefore, held that the section did not
apply to the Company since it was not established that that the Company
was one in which the public were not substantially interested, even though
the members of the family held more than 75% of the shares i-ssued by
the Company. On .a reference,. the Hi~h Court confirmed the order of the
Tribunal holding that even on the finding that the members of the family
were in a position to control the affairs of the Company, there was no
evidence of any overtact showing that they were acting in concert and
thereby constituted a block.
In appeal to this Court,
HELD : The approach to the problem by the Tribunal and High Court
was erroneous. It was for the Tribunal to determine, ha'ling regard to
ordinary human experienC<> whether it may be safely taken that the members of the family must have acted together as a controlling block. That
822
SUPREME COURT RBPORTS
[1967] l S.C.R
enquiry had not been made and the case was decided on the application of
an erroneous test.
[830 C-D]
(i) In deciding whether an order under s. 23A (as on. the relevant date)
is called for, it must be decided in the first instance whether there wu a
group of penoos acting in concen holding a sufficient number of shares
which may control the voting as a block. It is sufficient, if having regard
to their relationship, their conduct, their common interest etc. it may be
inferred that they must be acting together : evidence of actual concerted
acting is normally difficult to obtain and is not insisted upon. It is the
holding in the aggregate, of a majority of the shares issued, by a pel"°'1
or persons acting 10 concen in relation to the affairs of the company which
establishes the existence of a block, and if the block holds 75% of the
voting power it shall be deemed that the company is one in which the
public are not substantially interested. To establish that a company is one
in which the public are not substantially interested, it is not a condition
that actual exercise of control by a group must be established.
[828 B.
P,.F; 829 F-H]
(ii) The fact that cenain provisions of the Taxation of Income (lnv~ti
gation Commission) Act were held to be ultra
vires did not render tho
Commission an unlawful body, and the admissions recorded by the Commission could not be ignored. The repon could be taken in evidence after
giving an opponunity to the respondent to make its representation again.st
the rcpon and to tender evidence against the truth of the recitals contained therein.
[830 B-D)
Raghuvan.rhl Mill.r Ltd. v. Commis1ionu of lnccmu-tax, [1961) 2 S.C.R.
978 and Commission.r of lncom•-tax v. Jubi/-. Mi/1.r, [1963) Supp. 1
S. C. R. 83, followed.
C!vIL APPELLATE JURISDICTION : Civil Appeals Nos. 672 &
673 of 1965.
Appeals from the judgment and order dated August 17, 1962
of the Calcutta High'Court in Income-tax Reference No. 32of19599
S. T. Desai, R. Ganapathy Iyer and R. N. Sachthey, for the
appellant (in both the appeals).
A. K. Sen and D. N. Mukherjee, for the respondent (in both
the appeals).
The Judgment of the Court was delivered by
Shah, J. M/s East Coast Commcrical Company Ltd. hereinafter called 'the Company'-·disclosed in its return for the assessment years 1950-51 and 1951-52, a consolidated net profit of Roi.
8,89,241/- for the account Friod April 7, 1949 to July 16, 1950.
The Income-tax Officer computed the income of the Company
for the assessment year 1950-51 at Rs. 7,27,824/- and for the assessment year 1951-52 at Rs. 2,00,803/-.
It came to the notice of the
Income-tax Officer that the Company was one in which the public
were not substantially interested within the meaning of s. 23A
of the Income-tax Act. l 922, and that the distributable profit after
deducting tax due on the total income was Rs. 4,32,151/- for the
assessment year 1950-5!, and Rs. 1,13,579/- for the assessment year
1951-52, and that the Company had distributed Rs. 43,910/- only
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C.I.T. v. EAST COAST COMMR. CO. (Shah, /.)
823
as dividend. The Income-tax Officer commenced proceedings
under s. 23A of the Income-tax Act, 1922, and passed an order
that the undistributed portion of the assessable income of the
Company as computed for income-tax purposes and reduced by
the amount of income-tax and supeF-tax shall be deemed to have
been distributed as dividends among the shareholders. The order
was confirmed by the Appellate Assistant Commissioner. But
the Income-tax Appellate Tribunal reversed the order. The Tribunal held that s. 23A did not apply to the Company since it was
not established that the Company was one in which the public
were not substantially interested.
At the instance of the Commissioner of Income-tax, three
questions were referred to the High Court of Judicature at Calcutta., In these appeals the first question alone is material :
"Whether on the fa~ts and in the circumstances of
the case the Tribunal erred. in law in holding that the
assessee-company was one in which the public are substantially interested within the meaning of s. 23A of the
Indian Iricome-tax Act ?"
The High Court answered that question in the negative. The
Commissioner of Income-tax has, with certificate under s. 66A(2}
of the Income-tax Act, 1922, appealed to this Court.
Relationship between the members of the family jointly referred to as 'the Kedias' is explained by the following genealogy :
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Nagarmu!l
(Died in 1928)
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MababJT Prosad
Jhabarmull Kedia
(died in 1937)
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Prohladra1
Madangopal
(Died on 16-6-51)
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Puranmal
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Benarash1
Prosad
The joint status between the members of the family was severed
on July 4, 1943, and the members of the family formed themselves into a partnership and carried on the family business. Some
time thereafter Benarashi Prasad and Puranmall retired from the
partnership and 'started an independent business with an outsider
in partnership. This business was taken over by a private company styled 'East Coast Commercial Company Ltd.'. Later the
private company was converted into a public" limited company
bearing the same name and having a paid-up capital of Rs. 4,39,100/-
divided into 4,391 shares of Rs. 100/- each.
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SUPllEMB COURT REPORTS
(1967] 1 S.C.R.
Investigation was started against the members of the Kedia
family under the Taxation of Income (Investigation Commission)
Act, 1947. In the course of the investigation the heads Jf the
four branches of the Kedia family admitted that the shares in the
respondent company numbering 4, 115 were purchased by them
out of their joint income which had not been disclosed and a majority of the shares in the Company was held benami. An offer
of settlement was then made by the members of the Kedia family
before the Investigation Commission. In paragraph-26 of the
report, the Commission observed as follows :
"These figures have been accepted by Madangopal
Kedia for himself and as manager of the joint Hindu
family consisting of himself and his minor sons, Benarshi
Prosad Kedia for himself and as manager of the joint
family consisting of himself and his minor son and also
as the executor and legal representative of his deceased
elder brother Prohladrai, Puranmal Kedia, and Mahabir
Prosad Kedia for himself and as manager of the joint
family consisting of himself and his son, and they have
jointly filed a settlement application. Though these
persons are now divided and separate assessments to
income-tax are being made on each, they have admitted
that so far as the sec,ret profits in question were concerned, they were earned by all the members jointly and
have, therefore, requested that a single assessment may
be made treating them as an Association of Person'
and making each member and his joint family jointly and
severally liable for the tax."
It appears that 2,000 shares of the Compa~y were standing in the
name of Durgadutt Jhunjhunwalla who had declared hin1self to
be the sole proprietor of the business styled 'Mohanlal Murarilal'
carried on in the State of Hyderabad. It was found in the course
of the investigation before the Investigation Commission that the
shares were held by Durgadutt Jhunjhunwalla benami for the members of the Ked1a family.
By letter dated December 18, 1951 it
was admitted by them that Durgadutt Jhunjhunwalla was only a
"working partner" having a tentll share and that the entire capital
of the firm had been advanced by the Kedias jointly. Out of the
2,000 shares registered in tile name of Mohanlal Murarilal, 1.000
shares were then transferred to the executor of the estate of Prohladrai Kedia and the balance was taken over by Durgadutt JJjunjhunwalla on January 30, 1951, when his account was finally
5ettlcd, his personal account being credited with the sum of Rs.
I ,00,000/- representing his remuneration for services rendered till
October 20, 1949 and he being debited with that sum representing
the ,·alue of 1,000 shares made over to him. Therefore upto the
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C.I.T. v. EAST COAST COMMR. CO. (Shah, J.)
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aecount year 1951-52 in the 1,000 shares held in the name of
Duigadutt Jhunjhunwalla the members of the Kedia family had a
9/lOth share.
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By September 17, 1952 the members of the Kedia family got
all the shares transferred to their own names from the benamidars.
The share-holding of the various members of the family thereafter was as follows :
1. Madangopal Kedia
2. Benarshi Prosad Kedia
3. Prohladrai Kedia
4. Purnamal Kedia
5. Mahabir Pros ad Kedia
120 shares
495 shares
1,389 shares
650 shares
461 shares.
(Out of 1,389 shares held in the name of Prohaldrai Kedia, 1,000
shares were those which were transferred by Durgadutt Jhunjhunwalla).
Taking into account 900 shares-being 9/!0th share of the holding
of 1 000 shares which were transferred on January 30, 1951 in the
nam~ of Durgadutt Jhunjhunwalla, the total holding of the members of the Kedia family in the Company therefore stood at 4,015
shares. This holding was in excess of seventy-five per cent of the
total number of the shares issued by the Company.
The Income-tax Officer held that Madangopal Kedia ·and
others formed an association of persons. In his view 4, 115 shares
had been purchased benami out of the income earned jointly by the
members of the family and that the income was invested by them
as an association of persons, and that there was no evidence that
the income from those shares was taken individually by the members of the family, who even after disruption of the joint family
on July 4, 1943, had continued to work together and make their
investments as an association of persons. The Income-tax Officer
further held· that since the shares were never quoted in the market
and the affairs of the Company were under the control of the members of the Kedia family, an order under s. 23A of the Income-tax
Act could appropriately be made.
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In appeal, the Appellate Assistant Commissioner agreed with
the Income-tax Officer and held that the shares were acquired
jointly by the members of the family out of their "joint secreted
earnings". The Appellate Assistant Commissioner also proceede.d to analyse the minutes of !he meetings of the Company
showing the attendance at the meetings of the Company held between April IO, 1946 and December 30, 1951 and held that the
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members of the Kedia family had controlled the affairs of the
Company and on their admissions they had formed an association
for aQl:J.Uisition of the shares of the Company, and for· various
Ml 7SUp.C.I./66-8
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SUPREME COURT REPORTS
(1967] 1 S.C.R.
other purposes, and therefore it could be inferred that the members
of the association who controlled more than seventy five per cent
of the total shares and the voting power had acted in concert.
But the Income-tax AppeUate Tribunal held that the offers
made by the members of the Kedia family to the Income-tax Investigation Commission that a single assessment be made in respect of their "secreted income" treating them as an association of
persons and that every member of the family be treated as jointly
and severally liable to pay tax on that income were not relevant
in determining whether the Company was one in which the public
were not substantially interested, and that from the fact that the
members of the Kedia family held 4,015 shares, it could not be inferred that the shares were jointly acquired, or that the members
of the family exercised control over the affairs of the Company.
The Tribunal observed :
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" .... that unless and until the department clearly
established by proper material that the Kedias were acting
in concert there is absolutely no case for holding that the
provisions of Section 23A become applicable to the facts
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of the case as in this case we have held that there is nothing to indicate that the separated members of the Kedia
family acted in concert we hold that no case has been
made out by the Department for holding that the asscssee-company is one in which the public were not substantially interested."
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The High Court expressed a doubt that the report made by th•
Income-tax· Investigation Commission "may not be evidence of
anything contained therein", and proceeded to observe:
"There is no doubt upon the facts stated above, that the
five Kedias who held between them 3,115 shares, and
also had an interest in the 1,000 shares of Messrs. Mohan
Jal M urarilal, were in a position to control the affairs
of the Company. . . . Jn my opinion, Tribunal came
to rigltt conclusion. It may be that the holders of the
shares are in a position to control the Company. The
majority of shareholders may be directors or relatives
of directors or relatives of shareholders.
But, that is
not by itself sufficient to satisfy the test. There must
not only be evidence to show that a number of individuals
are in a position to control the company, but it must be
shown that they arc· in fact acting in concert and they
have constituted a 'block' so as to control the affairs ;of
the company by themselves. This requires some overt act.
... There is not a single fact to show that the Kedias
or their nomin"ees were in fact acting in concert or operating as a 'block'.
The Tribunal was right in
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827
coming to the conclusion that no materials were placed
before it by the Department to establish the fact that the
Kedias in question acted in concert or operated as a block,
so as to bring the asses~ee company within the· provision
of section 23A. "
By s. 23A(l) of the Income·tax Act as it stood in the relevant
years the Income·tax Officer was required, if satisfied that in
respect of any previous year the profits and gains distributed as
dividends by any company were less than sixty per cent. of the
assessable income of the . company of that previous year, as reduced by the amount of income-tax and super-tax payable by the
company in respect thereof, to make an order that the undistributed
portion of the assessable income of the company of that previous
year shall be deemed to have been distributed as dividends among
the shareholders as at the date of the general meeting: But this
power could not be exercised in respect of atiy company in which the
public are substantially intet<;sted. By the Explanation to s. 23A(l)
it was enacted that "a company shall be deemed to be a company -
in which the public are substantially interested if shares of the
company,. .. carrying not less than twenty.five per cent. of the voting
power have been allotted unconditionally to, or acquired unconditionally by, and are at the end of the previous year beneficially held by, the public .... and if any such shares have in the course
of such previous year been the subject of dealings in any stock
exchange .... or are in fact freely transferable by the holders to other
members of the public."
This Court in Raghuvanshi Mills Ltd. v. Commissioner of IncomeTax(') examined the scheme of s. 23A as it stood before the Finance
Act of l955 and observed :
"The word 'public' is used (in the Explanation) in
contradistinction to one or more persons who -act in
unison and among -whom the voting power constitutes a
block. If such a block exists and possesses more than
seventy-five per cent. of the vcitingpower, then the company
cannot be said to be one in which the public are substantially interested. . . •
...• the test is first to find out whether there is an
'individual or group which controls the voting power
as a block. If there be such a block, the shares held by
it cannot be said to be 'unconditionally' and 'beneficially' held by members of the public."
It is clear that in deciding whether an order under s. 23A(J) is called
for, the Income-tax Officer must determine-{i) whether there is
an individual or a group which can control the voting power as
(1) [1961] 2 S.C.R. 978-41 l.T.R. 613.
l.
826
SUPREME COURT REPORTS
[1967) l S.C R.
a block. The existence of such a block may be established by
showing that the voting power is vested in persons possessing
more than fifty per cent. of the shares issued who act in concert ;
and (ii) that the block exercises a controlling interest over the
affairs of the company. This con!fjtion is s?.tisfied only if the
voting power of the block or group is seventy-five per cent or
more. If the block holds seventy-five per cent of the voting power
it shall be deemed that the Company is one in which the public
arc not substantially interested. On the other hand, if the members of the public hold shares of the company (not being shares
entitled to a fixed rate of dividend, whether with or without a
further right to participate in profits) carrying not less than twenty
five per cent of the voting power allotted unconditionally to, or
acquired unconditionally by them, the Company shall be deemed
to be one in which the public are substantially interested.
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It is unfortunate that the Tribunal did not record a finding
whether there was a group of persons controlling the affairs of the
Company. In the view of the Tribunal, since the acquisition of
4,015 shares of the Company was not joint and there was no other
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evidence that the members of the Kedia family were in fact acting
in concert, the Company could not be deemed one in which the
public were not substantially interested. The High Court also
made a similar approach. They were of the view that even on the
finding that the members of the Kedia family were in a position
to control the affairs of the Company, there was no evidence of
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any OYert act showing that they were acting in concert and thereby
con~lituted a block.
In our judgment, that approach to the problem was erroneous.
The Tribunal had to decide in the first instance whether there was
a gr0up of persons acting in concert holding a sufficient number
of shares which may control the voting as a block. But the existence of a block is not decisiv~. If there be a group of persons
holding control over voting, the Company would still be a Company in which the public are substantially interested, if twenty-five
per cent. or more of the voting power has been allotted unconditionally to and beneficia.Jly held by the public and the shares were
in the previous years subject of dealings in any stock exchange in
the :axable territories or were in fact freely transferable by the
holders to other members of the public. The two enquiries are
distinct. The Tribunal in paragraph 9 of its order observed that there
was no material placed by the Department to show that the Kedias
in question acted in concert so as to bring the assessee company
within s. 23A. If thereby the Tribunal meant that there was no
evidence to prov~ that the members of the Kedia family "actually
acted in concert," the view taken by the Tribunal was, in our
judgment, wrong, since to establish that a Company is one in which
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C.I.T. V, EAST COAST COMMR. CO, (Shah, /.)
829
the public are not substantially interested, it is not a condition A
that actual exercise of control by a group must be established.
The High Court was apparently of the view that the members of
the Kedia family were in a position to control the affairs of the
Company, but there was no evidence of any overt act or concert
between them.
But in Commissioner of Income-tax, Bombay City-I v. Jubilee
Mills Ltd. (1) this Court held that no direct evidence of overt act or
concert between the members of the group having control over
voting was necessary to prove that the Company was not one
in which the public were substantially interested. It was observed
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in Raghuvanshi Mills' case(2) that "in deciding if there is such a C
controlling interest, there is no formula applicable to all cases.
Relationship and position as director are not by themselves decisive. If relatives act, not freely, but with others, they cannot be
said to belong to that body, which is described as 'public' in the
Explanation." In Jubilee Mills' case(1) this Court elaborated
those observations and stated :
"the test is not whether they have actually acted in
concert but whether the circumstances are such that human.
experience tells us that it can safely be taken that they
must be acting together. It is not necessary to state the
kind of evidence that will prove such concerted actings.
Each case must necessarily be decided on its own facts."
On an analysis of the reasons recorded by the Tribunal and
the High Court, it is clear that the Tribunal held that the Kedias
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did not form a controlling group because there was no evidence
that they actually controlled the voting, even though they held
more than seventy-five per cent of the shares issued by the Company : the High Court observed that the members of the Kedia F
family held 4,015 shares of the Company and were in a position
to control the affairs of the Company, but there was no evidence
to show that they did in fact act in concert and controlled the
affairs of the Company as. a block. But, as already observed, if
the members of the Kedia family formed a block and held more
than seventy-five per cent of the voting power, it was not necessary
to prove that they actually exercised controlling interest. It is
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the holding in the aggregate of a majority of the shares issued by a
person or persons acting in concert in relation to the affairs of the
Company which· establishes the existence of a block. It is sufficient, if having regard to their relation etc., their conduct, and H
their co=on interest, that it may be inferred that they must be
acting together : evidence of actual concerted acting is normally
difficult to obtain, and is not insisted upon.
(I) [1963] Supp. I S.C.R. 83-48 LT.R. 9.
(2) [1961] 2 S.C.R. 978
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830
SUPREME COURT REPORTS
[1967) I S.C.R.
We may observe that the High Court appears to have felt
some doubt as to the admissibility of the report of the Income-tax
Investigation Commission. But the Income-tax authorities are
not strictly bound by the rules of evidence, and the mere fact that
certain provisions of the Taxation of Income (Investigation Commission) Act relating to the inquiries to be held were declared to
B be ultra vires by this Court did not render the Commission an unlawful body ; and in any event the admissions which are recorded
by the Commission, as having been m;;de before them, cannot be
ignored. The report had evidentiary value and could be taken
into account. Undoubtedly the report had to be brought ·to the
notice of the Company, and the Company had to be given an ope purtunity to make its representation against the report and to
tender evidence against the truth of the recitals contained therein.
It is not suggested that this opportunity was not given. It was
for the Tribunal to detenni ".e, having regard to ordinary human
exp~riencc whether it may be safely taken that the members of the
Kedia family must have acted together as a controlling block. That
enquiry has not been made, and the case has been decided on the
D application of a test which is erroneous. We are, therefore, unable
on the statement of case to answer the question referred.
We accordingly set aside the order passed by the High Court
and direct that the Tribunal do submit a supplementary statement
of the case under s. 66(4) of the Income-tax Act, 1922, because in
E our view the statement of the case already referred to is not sufficient to enable determination of the case raised thereby. The
Tribunal may make such additions or alterations in the statement
of the case in the light of the observations made in the course of
this judgment. The Tribunal will submit the supplementary statement of the case to the High Court. The High Court will then
proceed to determine the question according to law. The costs
i' of this hearing will be costs in the proceedings before the High
Court.
Order of High Court set aside with direction to
the Tribimal to
submit supplementary statement of the case.
V.P.S.
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