COMMISSIONER OF INCOME-TAX, BOMBAY versus JUBILEE MILLS LTD., BOMBAY

Citation: [1963] SUPP. 1 S.C.R. 83 · Decided: 17-09-1962 · Supreme Court of India · Bench: J.L. KAPUR · Disposal: Appeal(s) allowed

Judgment (excerpt)

1 S.C.R. 
SUPREME COURT REPORTS 
83 
though not to increase it. The document was altered 
while in the possession of the very person who, as the 
agent of Anirudhan, brought it to the Bank on both 
the occasions. Anirudhan must be deemed to have 
held out Sankaran as his agent for this purpose and 
this creates an estoppel against Anirudhan, because 
the Bank believed that Sankaran had the authority. 
The offer thus remains in its amended form an offer 
of Anirudhan to the Bank and the Bank by accepting 
it turned it into a contract of guarantee which was 
backed by the past consideration on which the offer of 
Anirudhan was originally based. 
In my opinion, the appeal must fail. 
I would, 
therefore, dismiss it. 
BY COURT : In accordance with the opinion 
of the majority, the appeal is dismissed. There would 
be no order as to costs. 
Appeal dismissed. 
COMMISSIONER OF INCOME-TAX, BOMBAY 
v. 
JUBILEE MILLS LTD., BOMBAY 
(J. L. KAPUR, A. K. SARKAR AND 
M. HrnAYATULLAH, JJ.) 
Irwmie Tax-Individual members of companiu, aa"8&11lent 
of-Public s11bstantially interested, meaning of-Group control· 
ling more thnn 15% voting power-Managing Agents forming such 
II group-lndia11 Income-tax Act, 1922(11of1922), •· 23A. 
Section 23A of the Incom,.tax Act, 1922, empowered the 
Income-tax Officer to assess individual members of a company 
in respect of undistributed assc!Sable income of the company in 
certain circumstances. The proviso to this section made s. 23A 
iu.:pplicable to a company in which the public was substantially 
interested. The explanation to the proviso laid down that a 
company shall be deemed to be one in which the public was 
1962 
M. S. Anirudh<t 
v. 
Tiu Tlwmco's Ba• 
Ltd. 
Hidayatullah, I 
1962 
1962 
Commissioner nf 
mt'ttcome-ttVe, Bombay 
v. 
... ubilee Mills Ltd. 
84 
SUPREME COURT REPORTS [1963] SUPP. 
substantially interested if the shares of the company carrying 
not less than 25°/0 of the voting power had been allo(ted uncondi· 
tionally to or acquired by the public and were held beneficially 
by the public. It was found that though the directors of the 
company's qua directors did not hold more than 75% of the 
shares, the shares held by such directors as were partners in the 
firm of the Managing Agents of the con1pany together with the 
shares held by other partners of the Managing Agents and tbe 
shares held by the members of the Managing Agency on behalf 
of minor children exceeded 75% of the voting power. 
Hekl, that the company was not one in which the pub I ic wa. 
substantially interested and s. 23A was applicable to it. No 
person could be said to belong to the "public" unless he held 
the shares unconditionally and beneficially for himself. The 
v..•ords "unconditiOnally" and "beneficially" indicated that the 
voting power arising from the holding of thos.e shares should be 
free and not within the control of some sharehold.r and the 
holder should not be a nominee of.another. Directors, qua 
directors, were not without the pale of the public as there was 
nothing that required them to act in unison. What ·had to 
be seen was whether there was any individual or a group hold-
in15 the controlling interest which group acting in concert could 
direct the affairs of the compa~y at its will. The partners of 
the Managing Agency constituted a group holding more than 
75% of the voting power in the company and they could not be 
counted as public as they must be taken to act in their own 
interest in unison". 
Commissioner of Income-tax v. H. Bjordal, [1955] 
28 
I. T. R. 25, referred to. 
Shri Changdeo Sugar Mills Ltd. v. Commi88ioner of Income-
tax, Bombay, [1961] 41 I. T. R. 667 ahd Ritghuvanshi MilZ. Ltd. 
v. Commi,,sioner of Income-tax [1961] 41 I. T. R. 613, relied on. 
CIVIL APPELLATE juR1SDICTION : Civil Appeal 
No. 599 of 1961. 
Appeal from the judgment and order dated 
March 13, 1958, of the Bombay High Court in 
I. T. R. No. 40 of 1957. 
R. Ga=pathy Iyer and R. N. Sachthey, for the 
appellant. 
A. V. Viswana.tha Sastri and J. N. Shmfj, for 
the respondent. 
1962. September 17. The Judgment of the Court 
was delivered by 
l S.C.R. 
SUPREME COURT REPORTS 
85 
HrnAYATULLAH, J.---This is an appeal on a certi-
ficate of fitness granted by the High Court of Bombay 
against the judgment of the High Court dated March 
13, 1958, on a reference made by the Income Tax 
Appellate Tribunal. The Commissioner of Income 
Tax, Bombay City I, is the appellant and tbc Jubilee 
Mills Ltd., Bombay, the 

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