PUNJAB PRODUCE AND TRADING CO. LTD. versus C.I.T WEST BENGAL, CALCUTTA

Citation: [1971] SUPP. 1 S.C.R. 977 · Decided: 29-07-1971 · Supreme Court of India · Bench: K.S. HEGDE · Disposal: Dismissed

Judgment (excerpt)

977 
PUNJAB PRODUCE AND TllADING CO. LID. 
v. 
c.J.T. WFSf BENGAL, CALCUTIA 
July 29, 1971. 
[K. S. HEGDE AND A. N. GROVER, JJ.] 
Income-tax Act, 1922, •· 23A(9) Explanation (b) (ii1)-Share• of com-
pany carrying more than 50% voting ·power held by less than six persotU-
AOairs of company not controlled by le11 than six /HTIOM-Company 
whether one in which public are subst1111tially i.nttre1ted-Whether one 
condition or both conditions in cl. (b) (iii) of Explanation should be ful-
filled-Limitation under •· 34(1) of Act whether applicable where additional 
1u~r·tax is imposed under 1. 23.A. 
The assessee company was incorporated under the erstwhile Gwalior 
Companies Act which did not make any distinction between public and 
private companies. The affairs of the company were not controlled by ICIS 
than six persons but shares carrying more than 50% of the total votin1 
power were during the relevant previous year held by less than 6 persons. 
After the company's assessment for the assessment year 1955-56 had been 
completed the Income-tax Officer levied additional super-tax on the com-
pany under s. 23A of the Income-tax Act, 1922 holding that it wa• not a 
company in which the public were substantially interested within the mean-
in& of sub-cl. (b) (iii) of the Explanation to cl. (9) of s. 23A. Under tho 
Explanation a company is treated to be one in which the public are substan-
tially interested if it is not a private company under the Indian Companies 
Act and the affairs of the company or the shares carrying more than 50% 
;,f the total voting power are at no time durina the previous year control-
led or held by less than six persons. The authorities under th• Act as well 
as the High Court, in reference, held against the assessee. In appeal by 
speicia] leave to this Court the assessee contended that the word 'or' in 
sub-cl. (b) (ili) aforesaid had been used disjunctively and therefore if either 
of the conditions mentioned therein did not exist the company must be 
deemed to be one in which the public were substantially interested. Re-
liance was placed on the decision of this Court in the case of the Star 
Company Ltd. in which the word 'or' used in sub-cl. (b) (ii) of the afo1e-
said Explanation was held to have been used disjunctively. 
It was also 
contended that on the facts and circumstances of the case the imposition 
of the additionol super-tax under s. 23A without recourse to the provisions 
of s. 34(1) was not valid. 
. HELD: (i) The language of sub-els. (ii) and (ili) of cl. (b) is different. 
The former relates to a positive state of affairs whereas the latter lays 
down negative conditions. The word 'or' is often used to express an al-
ternative of terms defined or explanation of tho same thina in clilferent 
words. Therefore if either of the two negative conditions which are to. be 
found ID sub-cl. (b)'(iii) remains unfulfilled, the conditions laid down in the 
entire clauae cannot be said to have been satisfied. The clear Import of 
the word 'and' appearing there read with the negative or disqualifying con .. 
ditions in sub-cl. (b) (Iii) ia that the assessee was bound to satisfy apon 
from lb• conditions contained in tht> other sub-clau,.. that ita affairs were 
.at no time durina Ibo previous year controlled by less than 6 persona and 
ahatee carl'yillJ more than 50% ·of the totol votin11 JlOWCr were durina the 
same period not held by less than 6 pmons. (9821'-0J 
· · 
A 
B 
c 
D 
E 
F 
G 
978 
SUPREME COURT RLPORTS 
[1971] SUPP. s.c.R. 
A 
Star Company Ltd. v. Co111mis:sioner of lncon1e-1a.'f (Central) Cah·:1tta, 
c 
C. A. No. 1204/68 dt. 29·4-70. distinguished. 
Indian Steel & Wire Products ltd. l'alculta v. Cv1nmis~'io11er of lncotne-
tax, West Be..ga/, Ca/c111ta, l.T.R. No. 204 of 1961, referred to. 
(ii) An order made by the Income-ta< Officer directing payment of 
additional super-tax is not an order of assessment within the meaning of 
s. 34(3) of the Act and to such an order the period of limitation prescribed 
thereby does not apply. [983A-8] 
M. M. Parikh, l.T.O .. Special Inveltigation Circle 'B', Al11nedabad v. 
Navanagar Transport and Industries Ltd. & Anr .. 63 l.T.R. 663, followed. 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1344 of 
1967. 
Appeal from the judgment and order dated November 24, 
1966 of the Calcutta High Court in Income-tax Reference No. 
D 
8.6 of 1962. 
V. S. Desai, N. R. Khaitan, B. P. Maheshwariand Krish11ii 
Sen, for the appellant. 
Jagadish Swamp, 

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