9911796707
TMI Blog1953 (10) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... AS, J.---This is an appeal from the judgment and order of a Bench of the Calcutta High Court delivered on a reference made by the Income-tax Appellate Tribunal under Section 21 of the Excess Profits Tax Act, 1940, read with Section 66(1) of the Indian Income-tax Act, whereby the High Court answered in the affirmative the question of law referred to it. The question referred was :--- " Whether in the facts and circumstances of these cases, the Income-tax Appellate Tribunal was right in holding that the directors of the respondent company had a controlling interest in it as contemplated by Section 2(21) of the Excess Profits Tax Act ". The controversy arose between the parties during proceedings for assessment of excess profits tax for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and/or from time to time to appoint a special or general proxy to vote for and on behalf of the Aluminium Ltd. in respect of the shares held by it in the respondent company at all ordinary or extraordinary general meetings of the shareholders of the respondent company. Article 90 of the Articles of Association of the respondent company provides :--- " 90. Where a company registered under the provisions of the Indian Companies Act or not is a member of this company a person duly appointed to represent such company at a meeting of this company in accordance with the provisions of Section 80 of the Indian Companies Act, 1913, shall not be deemed to be a proxy but shall be entitled to vote for such company on a show of hands and to exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stant Commissioner observing that in view of the power of attorney that was given to Mr. L. G. Bash by the Aluminium Ltd. there was no room for doubt that the respondent company, which was then the appellant before the Tribunal, was a director-controlled company. On the application of the Commissioner of Income-tax, the Appellate Tribunal referred the question of law hereinbefore set out. By its judgment dated the 11th January, 1951, the High Court of Calcutta has answered the question in the affirmative. The Commissioner of Excess Profits Tax, West Bengal, has now come up on appeal to this Court with a certificate under Section 66-A(2) of the Indian Income-tax Act. In common parlance a person is said to have a " controlling interest " i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, according to the principles discussed above, they cannot be said to have " a controlling interest " in the respondent company. Learned counsel for the respondent company, however, contends, on the analogy of the reasonings adopted by the House of Lords in British American Tobacco Co. Ltd. v. Commissioners of Inland Revenue, that although Mr. L G. Bash does not hold the majority of shares and has no beneficial interest in the shares held by the Aluminium Ltd. in the respondent company and although he may be bound to cast the votes according to the directions of his principals, the Aluminium Ltd., and may be answerable to the latter if he acts in breach of his duty, nevertheless, as long as his authority is not revoked, as far as the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shares. The title in the shares remains vested in the shareholder. The shareholder may revoke the authority of the agent at any time. In spite of the appointment of the agent the shareholder may himself appear at the meeting and cast his votes personally. Therefore, the shares being always subject to his will and ordering, the controlling interest which the holder of the majority of shares has never passes to the agent. Let us take the facts of the present case. Under Article 90, when Mr. L. G. Bash as agent of the Aluminium Ltd. attends a general meeting of the respondent company he has to produce the resolution of his principals authorising him to cast the votes of his principals. The votes he casts are not his votes but are the votes o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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