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1 - 8 of 8 (0.21 seconds)Hira Mills Ltd. vs Commissioner Of Income-Tax (Central), ... on 17 April, 1964
75% of
the total shares bearing votes is 78,750. This shows that
the holding of the Managing Agents is short by 298 shares
for the application of the Explanation to s. 23A. But when
we turn to category "C" we find that 6,000 shares were held
by the members of the Managing Agency on behalf of minor
children and the voting power arising from these shares was
in their own hands as guardians. There is no doubt that in
the present case shares carrying more than 75% of the voting
power are held by persons who form a group in the sense
indicated by this Court in Raghuvanshi Mills case and by us
here. The reason is this: Shares carrying more than 75% of
the voting power are held by the partners of the managing
agency or persons under its control. Now it seems to us
that it is to the interest of the partners of this firm to
exercise their voting power in one way, namely the way that
brings to them the largest profit out of the company. It is
true that the managing agents are the servants of the
company in a manner of speaking and not its masters and also
that the object of a firm of managing agents is to carry out
certain administrative
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duties concerning the company under the control of the
directors of the company. That however is irrelevant and in
any case is far from the truth in the present case. Here
the partners of the managing agency practically own the
company.
Section 23 in The Income Tax Act, 1961 [Entire Act]
Section 66 in The Income Tax Act, 1961 [Entire Act]
The Industrial Finance Corporation Act, 1948
Income Tax Rules, 1962
Commissioner Of Income-Tax, Andhra ... vs H. E. H. Mir Osman Ali Khan on 25 October, 1965
The answer to the first question is in favour of the
Commissioner of Income Tax. The other side has not appealed
and Mr. Vishwanath Sastri for the assessee company conceded
before us that the High Court was right. The third question
depends on the answer to the first question but as it has
not been answered by the High Court we do not consider it
necessary to answer it here for the first time. We shall
now address ourselves to the second question.
The Tribunal in dealing with the question whether the public
could be said to hold 25% or more of the voting power in the
assessee company took into consideration a decision of the
Privy Council in Commissioner of Income Tax v. H.
Bjordal,(1) and held that though directors, qua directors,
do not cease to be members of the public, the holding of the
group of 14 individuals who collectively formed the Managing
Agency firm of Mangaldas Mehta & Co. could not be counted as
held by the members of the public in this case for purposes
of the Explanation. The Tribunal was further of the opinion
that this group of persons had a 'juristic personality' and
it should be taken into account as a group in determining
where the Controlling power vested according to the test
laid down by the Privy Council in the said case.
The Companies Act, 1956
1