| Case ID |
15de2dfe-8658-46b4-8949-862be01cbad0 |
| Body |
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| Case Number |
D-2741 of 1953 |
| Decision Date |
Jan 01, 1953 |
| Hearing Date |
Jan 01, 1953 |
| Decision |
The Supreme Court ruled that the directors of the respondent company did not possess a controlling interest as defined by the Excess Profits Tax Act. The case centered around the interpretation of what constitutes controlling interest, particularly in the context of majority shareholding. The Court clarified that the votes cast by an agent on behalf of a shareholder do not confer any legal or beneficial interest in the shares held. The decision of the Income-tax Appellate Tribunal was overturned, reaffirming that the controlling interest remained with the majority shareholder, in this case, 'A' Ltd., and not with its appointed director 'L'. Therefore, the tribunal's finding that the directors of the respondent company had a controlling interest was deemed incorrect. |
| Summary |
In the landmark case Commissioner of Income Tax v. Jeewanlal Ltd., the Supreme Court of India addressed the complex issue of controlling interest under the Excess Profits Tax Act, 1940. The case arose from a dispute about whether the directors of Jeewanlal Ltd. had a controlling interest despite not holding the majority of shares directly. The Court emphasized that controlling interest is determined by the ownership of voting shares, irrespective of beneficial interest. The ruling clarified that when an agent votes on behalf of a shareholder, the agent does not gain any interest in the shares, thus maintaining the controlling interest with the majority shareholder, 'A' Ltd. This case is crucial for understanding corporate governance and the legal implications of shareholding structures, especially concerning taxation and shareholder rights. Keywords: controlling interest, Excess Profits Tax Act, corporate governance, shareholder rights, Supreme Court of India. |
| Court |
Supreme Court of India
|
| Entities Involved |
A Ltd.,
Jeewanlal Ltd.
|
| Judges |
Patanjali Sastri, C.J.,
S.R. Das,
Vivian Bose,
Ghulam Hasan,
N.H. Bhagwati
|
| Lawyers |
C.K. Daphtary,
G.N. Joshi,
G.H. Rajadhyaksha,
N.C. Chatterjee,
S.C. Majumdar,
S.C. Banerjee
|
| Petitioners |
Commissioner of Income Tax
|
| Respondents |
Jeewanlal Ltd.
|
| Citations |
1953 SLD 246,
(1953) 24 ITR 475
|
| Other Citations |
CEPT v. Jeewanlal Ltd. [1951] 20 ITR 39 (Cal.),
British American Tobacco Co. Ltd. v. CIR [1939] 29 Tax Cas. 49 (HL),
CIT v. Bipin Silk Mills Ltd. [1946] 14 ITR 344 (Bom.),
CIR v. James Hodgkinson Ltd. [1949] 29 Tax. Cas. 395 (HL),
Glasgow Expanded Metal Co. Ltd. v. CIR [1923] 12 Tax. Cas. 573 (Eng.),
New Shorrock Spinning & Manufacturing Co. Ltd. v. CIT [1950] 18 ITR 712 (Bom.)
|
| Laws Involved |
Excess Profits Tax Act, 1940
|
| Sections |
2(21)
|