COMMISSIONER OF INCOME TAX Vs. INDIAN POTASH LIMITED

JUDGEMENT

(1.) THE question that is proposed by the Revenue in our opinion is a question for which the answer is evident to any reasonable person who reads the relevant statutory provision in a reasonable way. THE statutory provision is Section 2(18)(b)(B) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). Section 2(18) of the Act defines "company in which the public are substantially interested". THE company is regarded as one in which the public are substantially interested, inter alia, if the "shares in the company (not being shares entitled to a fixed rate of dividend whether with or without a further right to participate in profits) carrying not less than fifty per cent. of the voting power have been allotted unconditionally to, or acquired unconditionally by, and were throughout the relevant previous year beneficially held by-

(2.) THE Revenue's contention is that the reference to the Government, statutory corporation, company, and the public must be read disjunctively and that it is only when 50 per cent. or more of the shares are held by the Government alone, or by a statutory corporation alone, or by a company by itself, or by public, that the company can be regarded as one in which public are substantially interested. This argument has only to be stated to be rejected, having regard to the object of the section and the language employed in Section 2(18)(b)(B) of the Act. THE statutory provision refers to an unconditional holding of 50 per cent. or more of the shares with voting power attached to these shares with the further requirement that such shares shall be freely transferable. THE holder of these shares could be any one of the entities mentioned in that clause, viz., the Government, statutory corporation, company or public. Sub-clauses (a) to (c) of Section 2(18)(b)(B) of the Act refer to the persons who hold the shares. THEre is no requirement therein, on these individuals or legal entities, to hold the shares to the exclusion of others mentioned in other parts of Section 2(18)(b)(B) of the Act. THE use of the word "or" after each and every sub-clause is only to indicate that the shares will be held by any one of those listed legal entities or individuals and not that they should be held by one to the exclusion of others. No plausible reason for adopting the construction proposed by the Revenue, which could be regarded as being the object sought to be achieved by the provision, has been suggested to us. THE argument advanced is solely on the basis of the word "or" employed after each and every sub-category that each sub-category must be regarded as exclusive and not capable of including any of the other categories for the purpose of computing 50 per cent. of the voting power of the company.

(3.) THE questions proposed therefore do not merit reference and we decline to call for a reference. Counsel for the Revenue invited our attention to the order made in T. C. P. Nos, 135 to 138 of 1997 on July 29, 1997, wherein the court called for a reference on this question. We have perused the order of the court. We do not find any reasons having been set out in the order, except the court's view that the question arises out of the order of the Tribunal, we could not derive any assistance from that order. In the result, the tax cases petitions are dismissed.