COMMISSIONER OF INCOME TAX Vs. EXPRESS NEWSPAPERS LIMITED

JUDGEMENT

(1.) FREE Press of India (Madras) Ltd., a private limited company (hereinafter referred to as the Free Press Company) was carrying on business as printers and publishers of certain newspapers, namely, the Indian Express, Dinamani and Andhra Prabha at Madras, and Eastern Express and Bharat at Calcutta. During the course of the year 1946, the company also acquired rights in respect of Sunday Standard and Morning Standard at Bombay. There were only two shareholders in the company, and their holdings were as follows :

(2.) THE object of the new company was to acquire and take over the newspapers, the Indian Express, Dinamani and Andhra Prabha at Madras, and Eastern Express and Bharat at Calcutta and all or any of the assets and liabilities of the Free Press of India Ltd., Madras. There was no reference in the memorandum of association to the Sunday Standard or Morning Standard, as the latter company had not acquired the right to publish those papers by then, but there can be no doubt that the Express Company was formed with the specific object of taking over the entire business of the Free Press Company. It was admitted before the ITO that Mahadeolal Dalmia who is the cousin of Ramnath Goenka was not the real owner of the shares in either of the two companies, but held them merely benami for the benefit of Mr. Ramnath Goenka. But the same thing cannot be said of Bhagwandas Goenka or Basantilal Bhagwandas who should be treated as holding their respective shares in the Express Newspapers Ltd. in their own right. On 31st Aug., 1946, the Free Press Company passed the following resolutions :

(3.) NEARLY two months after the lease of the machinery etc., on 31st Oct., 1946, there was a general body meeting of the Free Press Company. It was resolved that the company should be wound up voluntarily. Mr. N. V. B. Sankar Rao, an advocate practising at Madras, was appointed the liquidator and he was invested with all the powers as such liquidator, in addition to those granted under cls. (b), (e) and (h) of S. 179 of the Indian Companies Act. One of the resolutions passed on that date stated :