LexNAWN ESTATES (P) LTD. versus C. I. T., WEST BENGAL
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.. ' A B c D F F G H 798 NAWN ESTATES (P) LTD. v. · C. I. T., WEST BENGAL October 14, 1976 [H. R. KHANNA AND JASWANT SINGH, JJ.] Income lax Act 1922-Sec. 23A(l)~Expln. 2(1) to Sec. 23A(l)- !'.1eaning of investment Companies, whether restricted to shares stocks and other securities or used in contradistinction with manufacturing processing &: trading operatio11s-lndian Companies Act 1913-Sec. 87(f)-Companies Act 1956-Sec. 372(11). Interpretation of statuteS>--Expressions not being terms of art whether to be construed in technical sense or ordinary popular sense as used by bu3i-· ness men-Legislative history as guide to construction-Genesis jlld develop- ment of law as key to interpretation-Whether EnKlish decisions useful guides or construction of analogous provisions, fundamenflll concepts and ge11aal principles. The appellant is a. Private Limited Company incorporated under the Indian Companies Act, 1913, its shares being held by the members of the Nawn family. The object of the appellant Company inter alia was pur- chase of land and buildings and letting out of lands and buildings in lieu of a-ppropriate consideration. The appellant at the relevant time was invest- ing monies in the house properties and its major income every year has been derived from those properties. The Income Tax Officer held that the appellant was a Company whose business consisted mainly in holding of investments as envisaged by secti&n 23A(l) and explanation 2(i) thereto of the Income Tax Act 1922 aind that since it had declared dividend which was less than the prescribed statutory 100 per cent of his total income as reduced by taxes referred to in clall!les a, b and c of section 23A(l), it was liable to pay super tax on the un- distributed balance of the distributable profits at the prescribed rate of 50 per cent. An appeal by the assessee before the Appellate Asstt. Commissioner succeeded. The Tribunal, however, restored the order of the Income-tax Officer. In a reference filed ait the instance of the assessee, the High Court answered the reference in favour of the Revenue and against the assessee. Jn an appeal by Special Leave, the appellant contended : That the appellant was not a company whose business consisied wholly or mainly in holding of investments because the meaning to be attributed to the said expression having not been defined by the Income Tax Act, 1922, the technical meaning assigned to "Invest- ment Companies" under section 87 (f) of the Indian Companies Act, 1913, which was in force when the Indian Income Taix Act, 1922 was enacted should be given, or, in the alternative, the meaning given to it in section 372(11) of the Companies Act, 1956, shouid be given to the said expression. So constru ng only the Companies whose principal business is the acquisition a.nd holding of shares, debentures, stocks and other securities would be covered by the Company whose business consists wholly or mainly in holding an . investment and that if it is so construed the aippellant would not be covered by section 23A(l). The counsel for the respondent Revenue contended : That the exores- sion "A company whose business consists wholly or mainlv in the holding of investments" means a Company whose income is derived from investments in contradiction to the income received from manu- facturing or processing or trading operations. The expression "in- vestment" in the context in which it occurs not being a term of art NAWN ESTATES V. C.I.T. WEST BENGAL 799 with a definite and technical meaming should be understood in its ordinary popular sense as understood in business parlance. Dismissing the appeal. HELD: 1. The expression investment is not defined in the Income-Tax Act but the Act also does not lay down that the terms and expression not defined therein shall htwe the same. meaning as given to them in the Companies Act. [802AJ • 2. The legislative history of the Income Tax Act, 1922 right from its amendment in the year 1955 and thereafter as well as the Legislative history of the Income Tax Act, 1961, clearly shows that Legislature did not adopt the definifton of investment Companies as given in the Indian Companies Act, 1913 or in the Companies Act, 1956. [801H, 802A-B] 3. While enacting section 23A and explanation 2(i) thereto the Legis- lature intended to cover fields of activity wider than those contemplated by the provisions of the Companies Act, 19
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