COMMISSIONER OF INCOME-TAX. WEST BENGAL versus MESSRS .JEEWANLAL LTD.

Citation: [1954] 1 S.C.R. 189 · Decided: 08-10-1953 · Supreme Court of India · Bench: M. PATANJALI SASTRI, SUDHI RANJAN DAS, VIVIAN BOSE, NATWARLAL HARILAL BHAGWATI, P.N. BHAGWATI · Disposal: Appeal(s) allowed
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Judgment (excerpt)

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• 
S.C.R. 
SUPREME COURT REPORTS 
189 
COMMISSIONER OF INCOME-TAX. 
WEST BENGAL 
v. 
MESSRS .• TEEW ANLAL LTD. 
[PATANJALI SASTRI C.J., S. R. DAS, V1VIAN BosR, 
GHULAM HASAN and BHAGWATI JJ.] 
Excess Profits Tare Act (XV of 1940), s. 2(11)-Director con-
trolled company-Definition-Directors aidhori.sed by another com-
pany holding majority of shares to vote in respect of the shares-
Company, whether director controlled. 
Ordinarily a company will be a "company, the directors where-
of have a controlling interest therein" for the purposes of the 
Excess Profits Tax Act, 1940, only if the directors thereof hold, and 
are entered in the share register as holders of, a majority of the 
vote-carrying shares of the company. It is not necessary that 
they must have a beneficial interest in such shares, but the mere 
fact that one of the directors of the company has been authorised 
by another company which held a majority of shares in the former 
company, to vote on its behalf in respect of the shares held by it, 
will not make the former company a director controlled company. 
Glasgow Expanded Metal Co. Ltd. v. Commissioners of Inland 
Revenite (12 Tax Oas. 573), Commissioners of Inland Revenue v. 
B. W. Noble (12 Tax Oas. 911), Inla.nd Revenue Commissioners v . 
• T. Bibby and Sons Ltd. (14 I.T.R. Suppl- 7, 29 Tax Cas. 167), 
Commissioner of Income-tax v. Bipin Silk 111ills Ltd. (14 I.T.R. 344) 
and Commissioners of Inland Revenne v.1-Iodgkinson (Salford) Ltil. 
(29 Tax Oas. 395) relied on. 
British A?nerican Tobacco Co. Ltd. v. 
Commissioners of Inland Revenue ([1943] A.O. 335) and New Shorrock 
Spinning and Manil/acti;ring Co. Ltd. v. Commissioner of Income-
tax, Bombay (18 I.T.R. 712) distinguished. 
CrvIL APPELLATE JURISDICTION: Civil Appeal No. 
78of1952. 
Appeal from the Judgment and Order dated the 
17th January, 1951, of the High Court of Judicature 
at Calcutta (Harries C.J. and Banerjee J.) initsSpecial 
Jurisdiction (Income-tax) in Income-tax Reference 
No. 50 of 1950. 
Q. K. Daphtary, Solicitor-General for India (G. N. 
Joshi, with him) for the appellant. 
26 
1953 
SUPREME COURT REPORTS 
(1954) 
1963 
N. 0. Chatterjee (S. O. Ma}umdar, with him) for the 
Com.missioner of respondent. 
Income-tax, 
1953. October 8. The Judgment of the Court was 
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West Bengal 
d ]" 
d b 
v, 
e IVere 
y 
Messrs. 
Jeewanlal Ltd. 
DAS 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 11nd 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 
five chargeable accounting periods ending on the 31st 
December of each of the years 1939 to 1943. 
The relevant facts which are not in dispute are these: 
The respondent company is a company incorporated 
in what was then British India having a capital of 
Rs. 3,600,000 divided into 360,000 shares of Rs. 10 
each. The Aluminium Limited, a company incor-
porated in Canada, held 359,790 shares in the 
chargeable accounting periods ending on December 31, 
1939, and December 31, 1940, and 359,600 shares in 
the chargeable accounting periods ending on December 
31, 1941, December 31, 1942, and December 31, 1943. 
In exercise of the power given to it by article 105 
of the articles of association of the respondent com-
pany, the Aluminium Ltd. appointed three permanent 
directors on the board of directors of the respondent 
company. Two of these directors eventually retired 
and only one, namely, Mr. L. G. Bash cont.inned to 
be a director of the respondent company nominated 
by the Aluminium Ltd. Mr. L. G. Bash and the other 
directors had between them during the chargeable 
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S.C.R. 
SUPREME COURT REPORTS 
accounting periods ending on December 31, 1939, 
and December 31, 1940, only 210 shares and in the 
chargeable accounting periods ending on December 31, 
1941, December 31, 1942, and December 31, 1943, 
400 shares, Mr. L. G. Bash not having a si
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