Law:

Section:

Section 104 of the Income-tax Act, 1961 [Corresponding to section 23A of Indian Income-tax Act, 1922] – Additional income-tax on undistributed profits of certain companies – Whether it is only when revenue has brought some relevant materials on record from which legitimate inference can be drawn to effect that a group of shareholders holding more than 75 per cent of shares of a company have acted in concern in relation to affairs of company, company must disprove it by producing relevant materials and by adducing cogent evidence in its possession to satisfaction of Tribunal - Held, yes - Members of a family held more than 75 per cent shares in company – Tribunal submitted that having regard to continued association of members of family in joint business even after partition, they could be taken to be acting in correct – Tribunal did not take into account board resolutions and proceedings to annual general meeting – It also did not apply its mind on controversial issues regarding management and affairs of company and also overlooked ordinary expectation for individual profit in commercial undertaking – Whether Tribunal did not properly appreciate enquiry and, therefore, it should be directed to further submit supplementary statement of case - Held, yes FACTS The Supreme Court directed the Tribunal to submit a supplementary statement of the case on the question whether the members of Kedia family who were holding 75 per cent shares of the company were acting in concern in relation to the affairs of the company which established the existence of a block. The Tribunal in the supplementary statement of the submitted the finding that having regard to the continued association of the members of the Kedia family in joint business even after the partition, they could be taken to be acting in concern. On reference : HELD It is only when the revenue has brought some relevant materials on the record from which a legitimate inference can be drawn to the effect that a group of shareholders holding more than 75 per cent of the shares of a company have acted in concert in relation to the affairs of the company, the company must disprove it by producing relevant materials and…

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