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TMI Blog2005 (4) TMI 519X X X X Extracts X X X X X X X X Extracts X X X X ..... share capital of the assessee company is not held by M/s. Piramal Finance Investment Pvt. Ltd." 2. The short issue that we are really required to decide, in order to adjudicate on the abovementioned ground of appeal is whether in order to avail exemption under section 47( v ) of the Income-tax Act, 1961, entire share capital of a subsidiary company is required to be held only in the name of the holding company, or whether beneficial ownership of the entire share capital would suffice. Learned representatives agree on this proposition. 3. The controversy arises in this background. During the relevant previous year, the assessee company transferred 1,05,000 shares of Morarjee Mills to M/s. Piramal Finance Investments Pvt. Ltd. (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference shares held in the joint names of PFI and one of the directors Shri A.G. Piramal ousted the appellant s claim. As has been stated earlier, these shares were held in joint names with the sole intention of complying with the requirements of the Companies Act which provides that a company may hold any shares in its subsidiary in the name of names of any nominee or its nominees and to ensure that the number of members is not reduced to below 2 in the case of a private company. Further, Shri A.G. Piramal being the nominee could act jointly with the company and individually and he had no rights of his own in respect of the shares and was also entitled to bring proceedings on the basis of one of the registered holders. Further, it is noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with divine prescience and perfect clarity . We can do no better than repeat the famous words of judge learned Hand when he said : . . . It is true that the words used, even in their literal sense, are the primary and ordinarily the most reliable source of interpreting the meaning of any writing : be it a statute, a contract or anything else. But it is one of the surest indexes of a mature and developed jurisprudence not to make a fortress out of the dictionary; but to remember that statutes always have some purpose or object to accomplish, whose sympathetic and imaginative discovery is the surest guide to their meaning. We must not adopt a strictly literal interpretation of . . . .but we must construe its language having regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the result that the plain intentions of the Legislature has entirely failed by the reason of slight in exactitude in the language of the section. If we were to adopt this construction, we should be construing the Act in order to defeat its object rather than with a view to carry its object into effect. Vide also Craies on Statute Law, page 90, and Maxwell on the Interpretation of Statutes , Tenth Edition, pp. 236-237. A statute is designed observed Lord Dunedin in Whitney v. IRC [1925] 10 Tax Cases 88, to be workable, and the interpretation thereof by a court should be so as to secure that object, unless crucial omission or clear direction makes that end unattainable." Here again the emphasis of the Hon ble Supreme Court was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason alone, the interpretation canvassed by the revenue is to be rejected. 10. In any event, all that section 47( v ) requires is that the whole of share capital is held by the holding company. The shares, even in joint names with A.G. Piramal, are held by the company and he has become joint owner only in fiduciary capacity for the assessee company. He is a director of the company and he has to follow the instructions of the company in his regard and the company is actual owner of the company. The beneficial ownership has not even been doubted by the revenue at any stage. The words whole of share capital have been interpreted in such a literal sense that entire object of the provisions is defeated, that the provision has been made ent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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