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TMI Blog1973 (2) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ion No. 47 dated 9th December, 1933, has been issued granting exemption from payment of super-tax under the circumstances specified in it. A detailed reference to this notification will be made hereinafter. On 9th June, 1961, the petitioner-company applied to the Central Board of Revenue for exemption from payment of super-tax in pursuance of the aforesaid notification. This has been refused by the Central Board of Revenue by its order dated 30th December, 1963 (annexure " F "), on the grounds that all the conditions laid down in the aforesaid notification had not been satisfied by the petitioner-company. Aggrieved by this order, the petitioner has filed this writ petition challenging the impugned order on the grounds, inter alia, that the order of the Board is not a speaking order and does not give reasons for refusing the exemption and, secondly, that, on the merits of the case, the order is not sustainable in law. The writ petition has been contested on behalf of the respondents and a counter-affidavit has been filed by Shri Jagdish Chand Kalra, Deputy Secretary, Central Board of Direct Taxes, Ministry of Finance, dated 27th May, 1967. In this counter-affidavit, the contenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any reasons in support of its finding and certainly does not show that the Board has applied its mind to the question at issue. Reliance on behalf of the petitioner has been placed on an authority of the Supreme Court in Travancore Rayons v. Union of India. In this authority, in paragraph 11, Shah J. (as he then was), speaking for the court, observed that : " Necessity to give sufficient reasons which disclose proper appreciation of the problem to be solved, and the mental process by which the conclusion is reached in cases where a non-judicial authority exercises judicial functions, is obvious ; when judicial power is exercised by an authority normally performing executive or administrative functions, this court would require to be satisfied that the decision has been reached after due consideration of the merits of the dispute, uninfluenced by extraneous considerations of policy or expediency the court insists upon disclosure of reasons in support of the order on two grounds : one, that the party aggrieved, in a proceeding before the High Court or this court, has the opportunity to demonstrate that the reasons which persuaded the authority to reject his case were erroneous ; t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he order of the Board is, therefore, liable to be quashed on this ground alone. Mr. Aiyar has attempted to support the order on the ground that the Director of Inspection had, after discussion with the representatives of the petitioner, thoroughly examined the matter and the Board had adopted his report. In my opinion, the statutory authority is required to apply its own mind to the case and its examination by any other officer and mechanical acceptance of his report by the statutory authority does not satisfy the rule of law. Again, the knowledge and, for that matter, conjectures of the petitioner in respect of the reasons, is no substitute for the formal incorporation of the reasons in the impugned order. The petitioner may be entirely mistaken in its assessment of the reasons and nobody will hear (sic) it to say what the reasons were which weighed with the statutory authorities in passing the order. See the observations in Associated Tubewells Ltd. v. R. B. Gujarmal Modi. As pointed out by the Supreme Court in the above mentioned judgment, incorporation of the reasons is necessary to demonstrate that the authority has considered the matter according to law and that its order m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -------------------------------- Name of the company Group's holding Bharat Nidhi's Date (%) in total contribution No. of shares to the group ------------------------------------------------------------------------------------------------------------------------------------------------ Rohtas Industries 39.3% 27% 30-9-1961 Ashoka Cement Ltd. 34.97% 47.6% 30-9-1961 Bharat Collieries Ltd. 28.1% 58.5% 31-1-1961 S. K. G. Sugar Ltd. 31 1% 46.1% 17-3-1961 New Central Jute Mills 41.1% 28.8% 31-3-1961 Jaipur Udyog Ltd. 35.6% 39.3% 31-3-1960 Ashoka Marketing Ltd. 87.3% 32.7% 31-3-1961. ------------------------------------------------------------------------------------------------------------------------------------------------ The details of the groups' holdings along with the holdings of Bharat Nidhi Ltd., the petitioner, in the above companies is separately enclosed and is marked as annexure " R-7 ". (a) That it was found that Sahu Jain Ltd. was appointed as managing agents of the four companies mentioned below with the help of the voting power of Bharat Nidhi Limited as under : ------------------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.3 per cent., out of which 32.7 per cent. were the contribution of the petitioner. As the analysis shows that the number of the shares held by the petitioner in proportion to the total was 28.54 per cent. and the number of shares held by that group in the company (without the aid of the petitioner-company) was about 58.8 per cent. Therefore, the absolute control of the Sahu group was held even otherwise and the contribution of the petitioner-company did, therefore, not make any material difference. The learned counsel for the respondents has failed to satisfy me as to how possibly the petitioner-company, by investing funds in the aforesaid companies, really exercised or helped other persons to acquire or exercise control over the companies unless and until it held 50 per cent. or more shares. The other ground relied upon by the respondents mentioned in the counter-affidavit is that the acquisition of the shares by the petitioner-company enabled them to influence the voting power and helped the Sahu Jain Ltd. to be appointed managing agents of a company mentioned therein. Here again, there is a fallacy. If any company or person holds shares in any other company, it is natural tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h ulterior motive, is not exceptionable. The allegation that the very fact of acquisition of some shares by the petitioner-company in the companies where the Sahu Jain group had a voice contravenes condition No. (ii) of the statutory notification, lands the problem in a realm of suspicion and conjectures and it does not have any basis an facts. No material has been placed on the file of this court to show that the company was in fact engaged in acquiring or exercising control over any other company or enabling other persons to so acquire control over other companies or groups of companies. The material placed in the counter-affidavit is not sufficient for the Central Board of Revenue to reasonably arrive at a finding that the company had not satisfied condition No. (ii). If the Board possesses any other reasons or any other material to support its view, it is not possible for me to determine it at this stage. As a result, the writ petition is allowed and the order of the Central Board of Revenue dated 30th December, 1963, is quashed and the Board is directed to reconsider the matter according to law in the light of the observations made above. The writ petition is disposed of acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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