Judgement

GROVER, J.: These appeals by certificate from a judgment of the Calcutta High Court arise out of Income-tax References in which the main point involved was whether the assessee company could be regarded as one in which the public are substantially interested within the meaning of the Explanation in Section 23-A of the Indian Income-tax Act, 1922, hereinafter called the "Act".

2. The appeals relate to the assessment years 1952-53 and 1954-55. The assessee is a public company incorporated under the Indian Companies Act, 1913. Article 37 of its Articles of Association provided as follows :-

"The Directors may at any time in their absolute and uncontrolled discretion and without assigning any reason decline to register any proposed transfer of shares."

The Income-tax Officer held that the assessee was a company in which the public were not substantially interested within the meaning of the Explanation in Sec. 23-A of the Act. Accordingly he applied the provisions of that section. The assessee appealed to the Appellate Assistant Commissioner. The appeal relating to the assessment year 1952-53 was dismissed but with regard to the subsequent year it was allowed. The Appellate Tribun