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IN THE HIGH COURT OF JUDICATURE AT BOMBAY

ORDINARY ORIGINAL CIVIL JURISDICTION

INCOME TAX APPEAL NO.226 OF 2006

The Commissioner of Income Tax

..Appellant

Vs.

M/s.Papilion Investments Pvt. Ltd.

..Respondent

Mr.Suresh Kumar for appellant.

CORAM :- V.C.DAGA &

J.P.DEVADHAR,JJ.

DATE :

28TH AUGUST, 2009

P.C.

1.

Heard learned Counsel for the parties.

2.

The Tribunal, in paragraph No.9 of its order, has recorded a categorical

finding, which reads as under:

9.

In the case before us, and in view of the provisions of the Companies

Act,1956, it is not possible for the PFIPL to have less than two shareholders. As

a matter of fact, there cannot be any company in India which has less than two

members i.e. shareholders. Now the requirement of Section 47(v) is that the

whole of the share capital of the subsidiary company should be held by the

holding company. The whole of the share capital being held by the holding

company is certainly not the same thing as whole of the share capital being

held in the name of the holding company. In fact, that situation is a legal

impossibility in India. In case one is to proceed on the basis that entire share

capital of the subsidiary company should be held in the name of the holding

company, there cannot be any situation in which section 47(v) can apply. That

is certainly not an interpretation which can be termed as ut res magis valeat

quam pereat, i.e. to make the statute effective rather than making it redundant.

As held by Hon’ble Supreme court, in the case of CIT Vs. Teja Singh (35 ITR

408), a construction which results in rendering a provision redundant must be

avoided. For this reason alone, the interpretation canvassed by the revenue is

to be rejected.

3.

Having seen the finding recorded by the Tribunal, no fault can be found with

the view taken by the Tribunal. In this view of the matter, appeal stands dismissed for

want of substantial question of law with no order as to costs.

(J.P.DEVADHAR,J.)

(V.C.DAGA,J.)