1. The only question arises on this reference is whether the assessee company was a director-controlled company or not a director-controlled company. The total number of shares of the company was 15,600 and the period with which we are concerned is the period from the 1st of October, 1944, to the 5th of June, 1945. During this period the total number of Shares held by the directors was 7,471. Therefore, during this period they controlled not a majority but a minority of the total votes which could be exercised as a result of the holding of shares. On these facts the Tribunal came to the conclusion that the assessee company was not a director-controlled company. It was urged before the Tribunal, as it has been urged before us by Sir Jamshedji Kanga, that two of the directors and shareholders Mafatlal Gagalbhai and Bhagubhai Mafatlal died on the 19th of July, 1944, and the 30th of September, 1944, and during the material period the shares which these two persons held were not transferred to any other shareholder, and therefore, according to Sir Jamshedji, in order to determine whether the directors had a controlling interest in the company or not, we must exclude 1,332 shares held by Mafatlal Gagalbhai and 5,604 shares held by Bhagubhai Mafatlal. If these shares were excluded, then undoubtedly the directors would have the majority of votes and, therefore, the assessee company would be a director-controlled company.

2. In order to appreciate this contention we have to consider what is the true connotation of the expression used in the Excess Profits Tax Act with which we are concerned. In order that the company should be director-controlled, the directors must have the controlling interest in the company, and the question is, what exactly does the expression "controlling interest" mean. It is well settled that the interest which the directors must have need not be a beneficial interest in the shares of the company. Directors may be put on the register of a company as trustee; even so the votes which they would command and which they could exercise will have to be considered in determining who had the controlling interest in the company. But the difficult that arises is, how is the voting strength which the directors have to be ascertaine ? The control which this expression contemplates is a voting control, such a control as would enable the directors at a general meeting of shareholders to get any resolution carried which would affect the administration or the management of the company. Two views have been pressed before us. The view that has been pressed before us by Sir Jamshedji is that you must determine the voting strength and the voting control by the effective votes which the directors control and which would ultimately determine the decision at a general meeting. The other view that has been pressed before us by the Attorney-General is that you have got to consider the voting strength from the shares which represent votes held by the directors. If you find that the directors held a number of shares which gives them a majority of votes, then they have a controlling interest in the company. It is irrelevant to consider whether the shares held by others represent the effective votes or not and also whether the votes are exercisable under certain eventualities that may happen or due to certain adventitious circumstances. If you find that the directors do not control a majority of votes by reason of the fact that they do not hold a sufficient number of shares which represent the majority of votes, then the directors do not have a controlling interest in the company. Whether the majority which is against them exercise all their votes, whether all those are exercisable or not, whether they choose to come at the general meeting or not, are all irrelevant circumstances. What we have got to consider is not the effective votes held by the persons other that the directors; what we have to consider is the actua