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Section 2(18)(b)(B)(iii) and Explanation 1 thereto of the Income-tax Act, 1961 - Company in which the public are substantially interested - Two banks, nominees of one charity trust, held more than 50 per cent shares of assessee-company - Whether in view of fact that while counting number of shareholders, it is the registered shareholders which matters, the said two banks were to be treated as two persons and not one single person under section 2(18)(b)(B)(iii) and Explanation 1 thereto - Held, yes Facts Two banks, who were nominees of a charity trust, were holding 50 per cent shares of the assessee-company. The revenue contended that under section 2(18)(b)(B )(iii) and Explanation 1 thereto, for the purpose of finding whether shares carrying more than 50 per cent of its total voting power were held by five or less persons, the persons who were nominees of any other person should be treated as a single person. If that was done, the revenue argued, more than 50 per cent shares of the assessee-company would be found to be held by less than five persons. The Tribunal held that two banks had never acted in concert and unison and they were the registered shareholders and, thus, the assessee was a company in which the public were substantially interested during the relevant previous years. On reference: Held Following the Supreme Court's decisions in the cases of Howrah Trading Co. Ltd. v. CIT [1959] 36 ITR, 215 and CIT v. Shakuntala[1961] 43 ITR 352 , in which, it was, inter alia, held that while counting the number of shareholders it is the registered shareholders which matter, the two banks were to be treated as two persons and not one single person. Accordingly, the order of the Tribunal was to be upheld. Cases referred to Howrah Trading Co. Ltd. v. CIT [1959] 36 ITR 215 (SC), CIT v. Shakuntala [1961] 43 ITR 352 (SC) and CIT v. Alcock Ashdown & Co. Ltd. [1979] 119 ITR 164 (Bom.). G.S. Jetley and Mrs. Singh for the Applicant. S.J. Mehta, S.P. Mehta and I.M. Munim for the Respondent. JUDGMENT Sugla, J. - The questions of law referred to us in this reference at the instance of the revenue are: "1. Whether, on the facts and in the circumstances of the case, the…

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