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Issues Involved:
1. Whether the assessee company was a director-controlled company. 2. Whether the commission due to the managing agents was a debt due by the company or borrowed money for the purpose of rules 2 and 2A of Schedule II to the Excess Profits Tax Act. Issue-Wise Detailed Analysis: 1. Director-Controlled Company: The primary issue was determining if the assessee company was a director-controlled company during the period from October 1, 1944, to June 5, 1945. The total number of shares in the company was 15,600, with directors holding 7,471 shares, representing a minority of the total votes. The Tribunal concluded that the company was not director-controlled based on these facts. The appellant argued that shares held by deceased directors Mafatlal Gagalbhai and Bhagubhai Mafatlal should be excluded from the calculation, which would give the directors a majority of votes. The court needed to interpret the term "controlling interest" under the Excess Profits Tax Act. The court emphasized that controlling interest refers to voting control, meaning the ability to carry resolutions affecting the company's administration at a general meeting. Two views were considered: one suggesting that only effective votes controlled by directors should be counted, and the other, supported by the Attorney-General, stating that the actual number of shares held by directors should determine control, irrespective of whether other votes were exercisable. The court favored the latter view, stressing that the register of shareholders and the articles of the company should determine the voting strength. The court referred to various authorities, including *Inland Revenue Commissioners v. Bibby & Sons Ltd.*, which emphasized controlling voting power over beneficial interest. Other cases, such as *British American Tobacco Co. v. Inland Revenue Commissioners* and *Glasgow Expanded Metal Co. Ltd. v. Commissioners of Inland Revenue*, supported the notion that controlling interest is determined by the number of shares held by directors. The court concluded that since the directors held only 7,471 out of 15,600 shares, they did not have a controlling interest, and thus, the company was not director-controlled during the relevant period. The answer to question (1) was in the negative. 2. Commission Due to Managing Agents: The second issue was whether the commission due to the managing agents constituted a debt due by the company or borrowed money under rules 2 and 2A of Schedule II to the Excess Profits Tax Act. This issue was covered by a recent decision in *Seksaria Biswan Sugar Factory, Ltd. v. Commissioner of Income-tax, Bombay*, which determined that such commission was a debt due. Thus, the answer to question (2) was that the commission was a debt due by the company. Conclusion: The court held that the assessee company was not a director-controlled company during the relevant period, and the commission due to the managing agents was a debt due by the company.
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