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TMI Blog1974 (12) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... is not a private company as defined in the Indian Companies Act, 1913 (VII of 1913), and ...... (iii) the affairs of the company or the shares carrying more than fifty per cent. of the total voting power were at no time during the previous year controlled or held by less than six persons, and in computing the number of six persons aforesaid, the Government or any corporation established by a Central, State or Provincial Act or a company to which the provisions of this section do not apply shall not be taken into account, and persons who are relatives of one another and persons who are nominees of any other person together with that other person shall be treated as a single person, the expression 'relative' in this context meaning husband, wife, lineal ascendant or descendant, brother or sister : ...... .." Similar in law is the position for the assessment year 1962-63 for which the provisions of section 104 of the Income-tax Act, 1961, have also to be guided by identical considerations. The Income-tax Officer found that in the case of the assessee the number of shares issued and subscribed was 1,50,000 in relation to the assessment year 1958-59. Out of this, the Income-tax O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted shareholding of the Hindu undivided family of which R. P. Goenka was the karta, such shareholding could not be clubbed with the shareholding of K. P. Goenka, Sushila Devi Goenka and Jagadish Prosad Goenka who are separate individuals. The Tribunal found that the shares in question stood registered in the name of M/s. R. P. Goenka Ors. and the name of the registered shareholder did not contain any further description such as karta of the Hindu undivided family, etc., nor did the names of any other persons figure. The Tribunal, therefore, held that the persons whose shareholdings had been clubbed together were relatives within the meaning of that expression as appearing in the Indian Income-tax Act, 1922, and, therefore, section 23A was attracted. In the common order of the Tribunal for the years under consideration the Tribunal has further found that there was no evidence in support of the contention of the assessee that the members of the purported association were specific and there was no evidence to show that the membership of the purported association could be gathered from the records of the company in which the shares were held. The Tribunal found that the registered sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the premises, according to counsel for the assessee, these shares were neutralised as such and they had no voting rights. In support of the contention counsel for the assessee drew our attention to the decision in the case of Vagliano Anthracite Collieries Ltd., In re [1910] WN 187. That was a motion by tne Thomas Blair and one William Blair Girling who had carried on business as solicitors in partnership. They asked that the registrar of members of the company should be rectified by entering their names thereon in respect of 250 fully paid-up shares in the capital of the company, then registered in the name of one Mrs. Cookson. The applicants were the holders as transferee of the shares in question from Mrs. Cookson. The transferees were expressed upon the face of the transfer to be Messrs. Blair W. B. Girling and it was purported to be executed by Blair W. B. Girling, the firm name, as transferees. The company had refused to register the transfer on the ground that they were not bound to enter the name of the firm on the register except by naming the members. When the motion came up for hearing the learned judge held that the application failed because the applicant's firm w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 2(6A)(e). The Hindu undivided family could not be considered to be a "shareholder" under section 2(6A)(e) and, hence, the loans given to the Hindu undivided family could not be considered as loans advanced to a shareholder of the company and could not, therefore, be deemed to be its income. The position, therefore, is that, in the eye of law, M/s. R. P. Goenka Ors. could not have been registered as shareholders but the fact is that they had been so registered. The law provides that if they were so registered, the company would suffer certain consequences as provided in section 150 of the Companies Act, 1956. Counsel for the assessee contended that inasmuch as the shares could not have been registered in such name there would be no voting right attached to the shares. It was contended that when a registered shareholder died but mutation of the names of the heirs and legal representatives of his heirs did not take place, the shareholding did not carry any voting right. We are, however, unable to accept the position that where a registered shareholder died and the name or names of the heir or heirs were not mutated, nobody could be considered to be a shareholder having ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . P. Goenka or Sri Jagadish Pd. Goenka. Counsel for the revenue contended that in this connection we must first construe the expression "relative" as a joint terminology and then find out if any of them is related to the other by the said meaning given in the definition. We are, however, unable to accept this argument for two reasons. Firstly, the section clearly enjoins that relationship must be between one another mentioned in the section. When the expression "relative" has been defined, it is not proper to construe the relationship by some other notion because there cannot be two different meanings to the same expression used in the Explanation. We have to remember further that it is not only a fiscal measure but is penal in nature as has been held by the Supreme Court. Therefore, this expression must receive strict construction. We are aware of the fact that this construction leads to certain amount of anomaly and absurdity. It will be a strange thing to say that sister-in-law or daughter-in-law would not be related to each other. But we have to find out the meaning given in the section. In the aforesaid view of the matter we are of the opinion that on this aspect of the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X
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